- 2011 to 2013
- 2014 to 2015
- Got crypto? Here’s how to avoid an audit from the IRS
- 2017 to present
- Role in Mt. Gox Liquidation and Investigation
- Navigation menu
- Kraken (company)
- New York Attorney General Inquiry
- What cryptocurrency kracken provides
- Scouring exchanges
- Kraken Review Summary
- Kraken Exchange Review
- How To Sell Cryptos Short On Kraken And Why You Should Be Doing It!
- Kraken Exchange
- External links
Kraken is a US-based cryptocurrency exchange, founded in 2011. The exchange provides cryptocurrency to fiat trading, and provides price information to Bloomberg Terminal.
The exchange has made several acquisitions, including:
- 19 January 2016 – the American Coinsetter and the Canadian Cavirtex
- 27 June 2016 – the Dutch CleverCoin
- 13 December 2016 – the American Glidera
- 1 March 2017 – charting and trading platform CryptoWatch
- 14 January 2020 – Australian cryptocurrency exchange, Bit Trade 
2011 to 2013
In 2011, founder Jesse Powell visited the offices of cryptocurrency exchange Mt.
Gox following that company's 2011 security breach. Powell told Bloomberg News he began working on Kraken as a replacement for Mt. Gox if that company were to permanently close, which it did in 2014.
In September 2013, Kraken launched after two years of testing and development. The exchange initially offered bitcoin, litecoin, and euro trades. Additional currencies and margin trading was later added.
In July 2013, Kraken joined other U.S.
American bitcoin players in the emerging payments and digital currency industry to form the Committee for the Establishment of the Digital Asset Transfer Authority (DATA). The stated aim of the committee was to establish DATA as the future self-regulatory body of the industry. DATA held its first annual meeting in April 2014.
In October 2013, Kraken formed an exclusive partnership with BaFin regulated Fidor bank.
Fidor provides Single European Payments Area (SEPA) payments for depositing and withdrawing from Kraken accounts.
In October 2013, Kraken announced that it had discovered major flaws in the Namecoin protocol and would not list the cryptocurrency until they were removed.
Former Kraken COO Michael Gronager, during the security analysis for onboarding the new cryptocurrencies, spotted a major vulnerability in the domain registration system and a bug that left .bit domain names susceptible to attacks and reassignment.
Although the flaws were soon fixed and Namecoin was listed on the Kraken exchange, it was delisted two years later after a decline in its trading volumes.
2014 to 2015
In March 2014, Kraken received a US$5 million Series A investment led by Hummingbird Ventures.
Other investors included Trace Mayer and Barry Silbert (Bitcoin Opportunity Fund).
In April 2014, Kraken became one of the first bitcoin exchanges to be listed on Bloomberg Terminal.
In July 2014, Kraken was part of a group of businesses that advised Mineyuki Fukuda (who was a member of the Japanese parliament at the time) and his IT committee on forming the Japan Authority of Digital Assets (JADA).
JADA is the first Bitcoin regulatory body with government backing.
In May 2015, Kraken announced the beta launch of margin trading, becoming one of the few bitcoin exchanges to offer trading on margin.
Initially the maximum allowed leverage for trading long or short was 3x (later raised to 5x).
In May 2015, it was announced that Howard Bernstein had joined Kraken as Chief Compliance Officer.
Bernstein has 20 years of experience in US financial regulation, including Merriman Capital Inc, where he helped to ensure that the publicly traded investment bank was compliant with SEC and FINRA requirements.
In June 2015, Kraken opened a bitcoin pool of Dark liquidity (or “dark pool”).
After its public refusal, Kraken expressed an intention to return service to New York residence pending the removal of what it perceived as unfair and counterproductive licensing.
Coinsetter, announced to clients in December 2015 that it would thenceforth impose a $65 fee to offset the cost of the very same BitLicense Kraken refused to afford. In absorbing Coinsetter, and by extension Cavirtex, the following month, Kraken opened up its platform to residents of 37 other states, and to all Canadian residents.
Alongside this deal, Kraken announced partnerships with payment providers SynapsePay in the U.S.
Got crypto? Here’s how to avoid an audit from the IRS
and Vogogo in Canada, in order to provide its newest clients with access to fiat deposits and withdrawals respectively.
One month later, Kraken announced the completion of its Series B round of investment lead by SBI Investment, a prominent Japanese venture capitalist firm under SBI Holdings.
Following this investment round, Kraken announced two major acquisitions that year: Dutch exchange CleverCoin, which was acquired in June, and Glidera, a wallet service allowing users to directly fund Glidera bank accounts with fiat for the purchase of cryptocurrencies on the Kraken exchange.
Kraken's reputation for security was challenged amidst 2016's buildout of partnerships and acquisitions.
Multiple claims emerged in the latter half of July via news media and social networks that clients’ accounts had been compromised and funds stolen.
As Kraken went silent reportedly for investigation, users threatened to alert and petition the FBI's Cyber Crimes Division for redress.
Within a month, Kraken presented clarification that ‘Kraken’ was never compromised; that is, after internal investigation, the security team reached the conclusion that Kraken systems, servers, and databases were not accessed by malicious attackers due to any identifiable vulnerability for which they would be responsible.
The company attributed affected users’ missing funds to phishing and man-in-the-middle attacks, and stressed the importance of enabling Kraken websites security features, such as two-factor authentication for withdrawals or the Global Settings Lock to restrict unfamiliar IP access. In the aftermath of the hack that wasn't, Kraken asserted recognition of their continued responsibility to protect clients, and stressed equally so, the client's responsibility in protecting him- or herself.
2017 to present
In April 2017, according to reports, Kraken launched fiat funding options to transfer denominated US dollars and government-issued currencies.[clarification needed]
Throughout 2017, the Kraken exchange suffered from DDoS attacks and performance issues.
In November 2017, Kraken CEO Jesse Powell apologized for the site issues, but praised security, citing its impeccable record.
Not long after Monero was listed Kraken continued to list additional crypto-currencies in the following months, such as USDT, MLN and Dash. In March Kraken acquired popular website Cryptowatch a real time charting site for crypto-currencies that is often used by day traders.
During the acquisition they also hired the founder of Cryptowatch Artur Sapek to help integrate Cryptowatch into Krakens systems and further the development of the platform.
In August Kraken listed Bitcoin Cash a hard-fork of Bitcoin with all clients that held bitcoin before the fork receiving an equal amount of Bitcoin Cash.
In December it has been reported that Kraken was registering up to 50,000 new users a day.
On 10 January 2018, Kraken suspended trading for over 48 hours while it performed an upgrade which was intended to take only 2 hours.
Since first opening in 2011, this was the longest interruption to service.
In April 2018, Kraken announced the closing of its services in Japan, after operating since October 2014, by the end of June due to the rising costs of doing business there.
in February, 2019, Kraken announced that it had raised US$100 million in a direct offering to its largest customers at a $4 billion valuation.
In February 2019, Kraken added cryptocurrency futures trading.
Role in Mt. Gox Liquidation and Investigation
Main article: Mt. Gox § Bankruptcy
In November 2014, Nobuaki Kobayashi, the court-appointed bankruptcy trustee overseeing the Mt. Gox liquidation, announced that Kraken was chosen to assist with the investigation of lost bitcoin and the process of returning remaining funds to creditors. According to an article in the Wall Street Journal, the trustee said that Kraken was chosen because of its proven operating history and because the company reports that its system has never been breached by hackers.
Gox, once the world's largest bitcoin exchange, filed for bankruptcy in February 2014. CEO Mark Karpelès said at the time that about 850,000 bitcoins had been lost, 100,000 belonging to the company and the rest belonging to about 127,000 creditors. Later Karpelès found about 200,000 bitcoins, leaving about 650,000 still missing. An article in the New York Times pointed out that the process of returning funds could significantly benefit Kraken because creditors will probably have to create a Kraken account to get their money back and some of them might continue using the exchange.
In April 2015, Kraken started accepting Mt.
Gox creditor claims through its website, a process which required creditors to create a Kraken account.
Creditors could also file their claim through the Mt. Gox website. Kraken offered the incentive of up to US$1 million in free trade volume to creditors filing their claim with Kraken. On July 6, 2015 the trustee announced that the deadline for filing online claims was July 29, 2015. However, the trustee did not at that time announce any deadline for the paper filing option.
As of the 09/09/2015 creditor meeting, the trustee reported funds secured for the Mt. Gox estate of 1,242,068,375 JPY and 202,159 bitcoins (together worth about US$60 million at the time). The trustee reported that he was still in the process of trying to secure more funds for the estate and that Kraken's assistance in investigating lost bitcoin was ongoing.
No date was given for when the creditors might expect to receive their share of remaining funds, but the trustee said that the date for investigating creditor claims was extended to the date of the next creditor meeting.
New York Attorney General Inquiry
The New York Attorney General's Office began a fact finding investigation in April 2018 on the measures taken by cryptocurrency exchanges to protect their customers and fight market manipulation and money laundering.
The New York State attorney general warned that the Kraken cryptocurrency exchange might be breaking the law. "Customers should be aware that the platforms that refused to participate in the OAG's Initiative (Binance, Gate.io, Huobi, and Kraken) may not disclose all order types offered to certain traders, some of which could preference those traders at the expense of others, and that the trading performance of other customers on those venues could be negatively affected as a result." Powell claimed that the investigation was hostile and bad for business, and refused to comply with the inquiry.
He claimed that market manipulation "doesn't matter to most crypto traders," and stated that "scams are rampant" among cryptocurrency exchanges.
In May 2018, Powell said that Kraken was considering registering as an alternative trading system (ATS), which would bring the company directly under U.S.
Securities and Exchange Commission (SEC) oversight.
The Attorney General's Office's final report, issued in September 2018, emphasized Kraken's non-participation in the inquiry and referred Kraken (as well as Binance and Gate.io) to the New York Department of Financial Services for potential violation of New York's virtual currency regulations.
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