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Kraken (company)

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(Redirected from Kraken Bitcoin Exchange)

For other uses, see Kraken (disambiguation).
Kraken
TypeCryptocurrency exchange
LocationSan Francisco, California, United States
Coordinates37°47′24″N 122°24′03″W / 37.790024°N 122.4008331°W / 37.790024; -122.4008331[1]
FoundedJuly 28, 2011; 13 years ago (2011-07-28)
OwnerPayward, Inc.[1]
Key peopleArjun Sethi (co-CEO),[2] Dave Ripley (co-CEO)[1]
CurrencyCryptocurrencies:[3] BTC, ETH, DOT, ADA, DOGE, XMR
Fiat currencies: USD, EUR, JPY, GBP, CAD, AUD, CHF, AED
Websitekraken.com

Kraken (legally named Payward, Inc.) is a United States–based cryptocurrency exchange, founded in 2011. It was one of the first bitcoin exchanges to be listed on Bloomberg Terminal and was valued at US$3 billion in January 2024.[4][citation needed] The company has been the subject of several regulatory investigations since 2018, and has agreed to cumulative fines of over $30 million.[5]

History

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Kraken was co-founded in 2011 by Jesse Powell, an alumnus of California State University, Sacramento with Thanh Luu and Michael Gronager.[6][7] Powell was a consultant for Mt. Gox in resolving a security issue, and began working on Kraken as a replacement anticipating its death; Gox would indeed collapse in 2014, failing security audits.[8][7] In September 2013, Kraken was launched, offering Bitcoin, Litecoin, and euro trades initially before going on to add additional currencies and margin trading.[9]

In March 2014, Kraken received a $5 million Series A investment from Hummingbird Ventures and Bitcoin Opportunity Fund.[10][11] A month later, Kraken became one of the first bitcoin exchanges to be listed on Bloomberg Terminal.[12] The same year, Kraken was chosen to assist with the investigation of lost bitcoins of Mt. Gox; the bankruptcy trustees relied upon Kraken due to its proven operating history without being breached by hackers.[13] In June 2015, Kraken opened the first dark pool for bitcoins.[14]

In January 2016, Kraken purchased Coinsetter and Cavirtex, an exchange based out of New York City.[15] With the purchase, clients automatically had accounts transferred over to Kraken.[16] A month later, Kraken announced the completion of its Series B round of investment led by the SBI Group and acquired Dutch exchange CleverCoin,[17] and Glidera, a cryptocurrency wallet service.[18] In March 2017, Kraken acquired Cryptowatch, a charting and trading platform.[19] By December 2017, Kraken claimed to be registering up to 50,000 new users a day.[20]

In April 2018, Kraken announced closure of its services in Japan due to the rising costs of doing business.[21] The company would later return to the Japanese market in 2020.[22] In February 2019, Kraken acquired Crypto Facilities, a British derivatives trading firm.[23] In June 2019, Kraken received $13.5 million from 2,263 individual investors via a special-purpose vehicle.[24]

In September 2020, Kraken was granted a special purpose depository institution (SPDI) charter in Wyoming,[25] becoming the first cryptocurrency exchange to hold such a charter in the United States.[26] In early 2021, Kraken sought additional funding from investors at a valuation of over $20 billion, with Tribe Capital becoming the company's second largest institutional investor behind Hummingbird Ventures and Arjun Sethi being appointed to the board of directors.[27]

In January 2021, Kraken released a mobile app for international users, which became available in the US in June 2021.[28] In September 2022, Dave Ripley – then chief operating officer – replaced Powell who became chairman of Kraken's board of directors.[29] In November 2022, the company launched a beta version of its non-fungible token (NFT) marketplace.[30]

In February 2023, Kraken shut down its operations in Japan, for the second time, and in the United Arab Emirates, less than a year after securing a license in the region.[31][22]

In June 2023, Kraken's NFT marketplace officially launched out of beta testing, with the option for users to pay for listings via fiat or cryptocurrency.[32] In September 2023, Bloomberg reported that Kraken planned to trade outside cryptocurrency for the first time, by offering trading in US-listed stocks and exchange-traded funds.[33]

Kraken gained a foothold in Europe during 2023 by adding virtual asset service provider (VASP) licenses in Ireland, Italy, and Spain;[34] in October of 2023, Kraken announced plans to continue its European push by acquiring a Netherlands-based crypto-exchange called Coin Meester B.V. (BCM).[35]

In March 2024, Kraken launched a new unit called Kraken Institutional aimed at providing service to institutional investors, hedge funds, and ETF issuers.[36]

In April 2024, Kraken released "Kraken Wallet", the company's own crypto wallet that supports eight blockchains.[37]

Controversies

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Government regulator investigations

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In April 2018, Kraken refused compliance with an investigation by the New York Attorney General's Office regarding the measures taken by cryptocurrency exchanges to protect their customers from market manipulation and money laundering, finding the associated expenditure to be bad for business.[38] The report went on to warn that the Kraken might be breaking the law, suggested that customers stay away from it, and referred the platform to New York State Department of Financial Services for potential violation of local virtual currency regulations.[39][40]

In March 2019, the exchange came to be investigated by the Office of Foreign Assets Control for potential violation of sanction-regimes by allowing trade with customers based in Iran; a settlement was reached in November 2022 with Kraken paying a fine of $362,000 in addition to agreeing to "invest an additional $100,000 in certain sanctions compliance controls."[41] In late September 2021, Kraken was ordered to pay a fine of $1.25 million to the Commodity Futures Trading Commission for offering unregistered margin trading.[42]

In February 2023, the Securities and Exchange Commission (SEC) categorized Kraken's staking service as an illegal sale of securities.[43] The company agreed to a $30 million settlement with the SEC in response to allegations that its crypto-asset staking products broke the regulator's rules; Kraken also agreed to cease selling its staking service in the U.S.[5]

In November 2023, the SEC sued Kraken in the case, SEC v Payward Inc et al, U.S. District Court, Northern District of California, No. 23-06003.[44] The SEC alleges that Kraken has been operating as a securities exchange without registering as such.[45] Kraken was also accused of mixing customer assets with its own funds.[46] Kraken replied that they do not list securities and there is currently no law to support the registration of crypto exchanges.[47]

Identifying Glassdoor reviewers

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In May 2019, Kraken filed a motion in California's Marin County Superior Court attempting to identify ten anonymous reviewers on Glassdoor.[48][49] Kraken sued them for allegedly breaching their severance contract. The Electronic Frontier Foundation, saying it represented the anonymous reviewers, claimed in 2020 that identifying the reviewers would harm their First Amendment free-speech rights and have a chilling effect on the expression of others.[50] In 2022, the court ordered Glassdoor to disclose the real identity of some reviewers.[7]

Work culture and layoffs

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In 2019, Powell suggested that parenting was a distraction to being productive and critiqued the economic viability of parental leaves; he went on to question whether choosing to not abide by relevant governmental regulations was a risk worth taking.[41] In June 2022, Powell urged employees in a work meeting to reject the usage of preferred gender pronouns; he then opened a Slack channel to debate whether people should be allowed to choose their gender but not their race or ethnicity.[7] The next day, Kraken released a "culture document" which outlined the libertarian values that it asserted were to be obeyed at work.[7] Among other things, employees were prohibited from labelling others' comments as "toxic, hateful, racist", etc., and particular emphasis was assigned on how "offensiveness" was not forbidden.[7] Powell and his fellow executives encouraged employees who disagreed with the policy to quit, and offered four months' severance for those who opted to do so.[7][51]

In November 2022, Kraken laid off about 1,100 employees – approximately 30 percent of its workforce.[52] According to Politico, Powell has advocated for "libertarian philosophical values" at Kraken.[53]

In October 2024, Kraken laid off around 400 employees, accounting for 15% of its workforce as part of a corporate restructuring which added Arjun Sethi as co-CEO.[54]

See also

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References

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  1. ^ a b c "Company Overview of Payward, Inc". Bloomberg. Retrieved 17 July 2016.
  2. ^ "A new day for Kraken". Kraken Blog. 30 October 2024. Retrieved 19 November 2024.
  3. ^ "Cryptocurrencies available on Kraken". Kraken Support. Retrieved 6 November 2021.
  4. ^ "Mt. Gox creditors start receiving bitcoin and bitcoin cash on Kraken". theblock. 23 July 2024.
  5. ^ a b "Crypto Exchange Kraken Ends Staking Program in $30 Million SEC Settlement". Bloomberg.com. 9 February 2023. Retrieved 11 February 2023.
  6. ^ "The $8 billion crypto unicorn that crypto loves to hate". Fast Company. Retrieved 31 May 2023.
  7. ^ a b c d e f g Mac, Ryan; Yaffe-Bellany, David (15 June 2022). "Inside a Corporate Culture War Stoked by a Crypto C.E.O." The New York Times. Retrieved 15 June 2022.
  8. ^ Alpeyev, Pavel (17 August 2014). "Mt. Gox Insider's Kraken Bitcoin Exchange to Open in Japan". Bloomberg News. Retrieved 4 October 2019.
  9. ^ "Sneak Peak[sic]: Rising From the Depths of the San Francisco Bay is Kraken". Finance Magnates: Financial and Business News. 3 May 2013. Retrieved 12 February 2018.
  10. ^ "Bitcoin exchange Kraken raises millions of dollars". CNET. 25 March 2014. Retrieved 12 February 2018.
  11. ^ Chernova, Yuliya (26 March 2014). "Big Day for Bitcoin Startups: Three Startups Haul in $23.5M in Funding". Wall Street Journal. Retrieved 12 February 2018.
  12. ^ "Bloomberg terminals now track bitcoin prices and virtual currency news". Retrieved 12 February 2018.
  13. ^ Mochizuki, Takashi (26 November 2014). "Kraken Bitcoin Operator to Help Liquidate Mt. Gox". The Wall Street Journal. Retrieved 22 February 2018.
  14. ^ "New dark pool addreses [sic] this major headache for Bitcoin traders". Business Insider. Retrieved 12 February 2018.
  15. ^ "Bitcoin exchange for Wall Streeters to close New York operations as part of deal with Kraken". BizJournals.com. Retrieved 13 August 2020.
  16. ^ Chavez-Dreyfuss, Gertrude (19 January 2016). "Bitcoin exchange Kraken buys Coinsetter, Cavirtex". Reuters. Retrieved 23 February 2024.
  17. ^ "Kraken has acquired Dutch Bitcoin exchange CleverCoin". SiliconANGLE. 28 June 2016. Retrieved 15 July 2021.
  18. ^ Flanagan, Will. "Chicago bitcoin startup Glidera acquired by San Francisco digital currency exchange". Chicago Business Journal. American City Business Journals. Retrieved 27 December 2016.
  19. ^ "Crypto exchange Kraken acquires trading platform as bitcoin soars". American Banker. Retrieved 11 February 2018.
  20. ^ Chaparro, Frank (23 January 2018). "Bitcoin exchange Coinbase reportedly made more than $1.25 billion in revenues last year". Business Insider Australia. Retrieved 11 February 2018.
  21. ^ "Cryptocurrency Exchange Kraken Pulls Out of Japan". Bloomberg.com. 17 April 2018. Retrieved 19 April 2018.
  22. ^ a b Browne, Ryan (28 December 2022). "Crypto exchange Kraken to shutter its Japan operations after global layoffs". CNBC. Retrieved 11 February 2023.
  23. ^ "Kraken Raises $100 Million, Acquires London Futures Firm". Fortune. Archived from the original on 30 May 2019. Retrieved 23 May 2019.
  24. ^ "Cryptocurrency exchange Kraken raises $13.5M in BnkToTheFuture campaign". SiliconAngle. 25 June 2019. Retrieved 13 June 2020.
  25. ^ Brett, Jason. "Cracking Landlocked Wyoming, Kraken Wins First Crypto Bank Charter In U.S. History". Forbes. Retrieved 23 February 2024.
  26. ^ "The First Cryptocurrency Bank". The National Law Review. Retrieved 3 July 2022.
  27. ^ Tan, Gillian (20 May 2021). "Crypto Platform Kraken Adds Tribe Capital's Sethi to Its Board". Bloomberg.
  28. ^ Sigalos, MacKenzie (2 June 2021). "Coinbase rival Kraken launches mobile app in U.S. to capitalize on crypto surge". CNBC. Retrieved 7 October 2021.
  29. ^ Kharif, Olga; Yang, Yueqi (21 September 2022). "Crypto Agitator Jesse Powell Steps Down as CEO of Kraken". Bloomberg.com. Retrieved 22 September 2022.
  30. ^ "Crypto Exchange Kraken Launches 'Gasless' NFT Marketplace". markets.businessinsider.com. Retrieved 22 November 2022.
  31. ^ "Crypto exchange Kraken shuts Abu Dhabi office". Reuters. 2 February 2023. Retrieved 11 February 2023.
  32. ^ "Kraken NFT Marketplace Launches With Support for Ethereum, Solana and Polygon Collections". Yahoo News. 8 June 2023. Retrieved 16 July 2024.
  33. ^ Irrera, Anna (27 September 2023). "Crypto Exchange Kraken Plans to Offer Trading in US-Listed Stocks". bloomberg. Retrieved 26 October 2023.
  34. ^ "MSN". www.msn.com. Retrieved 16 July 2024.
  35. ^ "MSN". www.msn.com. Retrieved 16 July 2024.
  36. ^ "Kraken Crypto Exchange Starts Unit for Institutional Customers". news.bloomberglaw.com. Retrieved 16 July 2024.
  37. ^ "Kraken Launches Open-Source, Self-Custodial Crypto Wallet". Yahoo Finance. 18 April 2024. Retrieved 3 June 2024.
  38. ^ Cheng, Evelyn (19 April 2018). "Kraken cryptocurrency exchange says it will not comply with New York inquiry". CNBC. Retrieved 3 May 2018.
  39. ^ Castillo, Michael del (18 September 2018). "New York Attorney General Warns That Kraken Cryptocurrency Exchange Could Be Violating Regulations". Forbes. Retrieved 4 October 2019.
  40. ^ Rooney, Kate (18 September 2018). "Crypto exchanges are ripe for manipulation and aren't doing much to stop it, New York AG says". CNBC. Retrieved 20 September 2018.
  41. ^ a b Saini, Manya; Lang, Hannah; Kuber, Shailesh (29 November 2022). "Crypto exchange Kraken settles U.S. investigation over alleged Iran sanctions violations". Reuters. Retrieved 6 December 2022.
  42. ^ Weil, Dan (29 September 2021). "Bitcoin Exchange Kraken to Pay $1.25M to Settle CFTC Charges". TheStreet. Retrieved 30 September 2021.
  43. ^ Sorkin, Andrew Ross; Mattu, Ravi; Warner, Bernhard; Kessler, Sarah; Merced, Michael J. de la; Hirsch, Lauren; Livni, Ephrat (10 February 2023). "The S.E.C. Signals a Crackdown on Another Crypto Practice". The New York Times. ISSN 0362-4331. Retrieved 19 February 2024.
  44. ^ Stempel, Jonathan (20 November 2023). "US SEC sues Kraken crypto exchange over failure to register". Reuters.
  45. ^ "SEC Sues Crypto Exchange Kraken, Alleges It Is Unregistered Broker". WSJ. Retrieved 19 February 2024.
  46. ^ Lawler, Richard (20 November 2023). "The SEC is suing Kraken". The Verge. Retrieved 19 February 2024.
  47. ^ "Kraken sued by SEC in latest clampdown on crypto exchanges". www.ft.com. Retrieved 19 February 2024.
  48. ^ Grothaus, Michael (12 February 2020). "Every employee's worst nightmare, getting outed on Glassdoor, could become a reality". Fast Company.
  49. ^ Claburn, Thomas (12 February 2020). "Crypto-upstart subpoenas Glassdoor to unmask ex-staff believed to be behind negative reviews. EFF joins the fray". The Register.
  50. ^ "Payward, Inc. (Kraken) v. Does 1–10". San Rafael, California: Marin County Superior Court. 11 February 2020 – via EFF.org.
  51. ^ Bailey, Kayla (17 June 2022). "CEO of crypto firm Kraken offers severance to 'triggered' employees". New York Post. Retrieved 30 September 2022.
  52. ^ Goswami, Rohan (30 November 2022). "Crypto exchange Kraken lays off 1,100 employees". CNBC. Retrieved 30 November 2022.
  53. ^ Cadelago, Christopher (10 April 2024). "How a crypto pioneer lost $1 million to the Gavin Newsom recall". reuters. Retrieved 11 April 2024.
  54. ^ Isaac, Mike; Yaffe-Bellany, David; Mac, Ryan. "Kraken Lays Off 15% of Workers and Names New Co-Chief Executive". The New York Times. Retrieved 19 November 2024.
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