Company:Kraken

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Short description: US-based cryptocurrency exchange
For other uses, see Kraken (disambiguation).
Kraken
K-logo-wikipedia.svg
TypeCryptocurrency exchange
LocationSan Francisco , California, United States
Coordinates [ ⚑ ] 37°47′24″N 122°24′03″W / 37.790024°N 122.4008331°W / 37.790024; -122.4008331[1]
FoundedJuly 28, 2011; 12 years ago (2011-07-28)
OwnerPayward, Inc.[1]
Key peopleDave Ripley (CEO)[1]
CurrencyCryptocurrencies:[2] BTC, ETH, DOT, ADA, DOGE, XMR
Fiat currencies: United States dollar , 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$10.8 billion in mid-2022.[3] The company has been the subject of several regulatory investigations since 2018, and has agreed to cumulative fines of over $30 million.[4]

History

Kraken was co-founded in 2011 by Jesse Powell, an alumnus of California State University, Sacramento with Thanh Luu and Michael Gronager.[5][3] 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.[6][3] In September 2013, Kraken was launched, offering Bitcoin, Litecoin, and euro trades initially before going on to add additional currencies and margin trading.[7]

In March 2014, Kraken received a $5 million Series A investment from Hummingbird Ventures and Bitcoin Opportunity Fund.[8][9] A month later, Kraken became one of the first bitcoin exchanges to be listed on Bloomberg Terminal.[10] 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.[11] In June 2015, Kraken opened the first dark pool for bitcoins.[12]

In January 2016, Kraken purchased Coinsetter (and by extension, Cavirtex), an exchange based out of New York City.[13] A month later, Kraken announced the completion of its Series B round of investment led by the SBI Group and acquired Dutch exchange CleverCoin,[14] and Glidera, a cryptocurrency wallet service.[15] In March 2017, Kraken acquired Cryptowatch, a charting and trading platform.[16] By December 2017, Kraken claimed to be registering up to 50,000 new users a day.[17]

In April 2018, Kraken announced closure of its services in Japan due to the rising costs of doing business.[18] The company would later return to the Japanese market in 2020.[19] In February 2019, Kraken acquired Crypto Facilities, a British derivatives trading firm.[20] In June 2019, Kraken received $13.5 million from 2,263 individual investors via a special-purpose vehicle.[21]

In September 2020, Kraken was granted a special purpose depository institution (SPDI) charter in Wyoming, becoming the first cryptocurrency exchange to hold such a charter in the United States.[22] 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.[23]

In January 2021, Kraken released a mobile app for international users, which became available in the US in June 2021.[24] In September 2022, Dave Ripley – then chief operating officer – replaced Powell who became chairman of Kraken's board of directors.[25] In November 2022, the company launched a beta version of its non-fungible token (NFT) marketplace.[26]

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.[27][19]

In 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.[28]

Controversies

Government regulator investigations

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.[29] 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.[30][31]

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."[32] 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.[33]

In February 2023, the Securities and Exchange Commission (SEC) categorized Kraken's staking service as an illegal sale of securities. 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.[4]

In the case SEC v Payward Inc et al, U.S. District Court, Northern District of California, No. 23-06003,[34] in November 2023, the SEC sued Kraken alleging it operated as an unregistered securities business. The SEC also accused Kraken of mixing its own funds with its customers'. Kraken replied that they do not list securities and disagree with the complaint.[35]

Identifying Glassdoor reviewers

In May 2019, Kraken filed a motion in California's Marin County Superior Court attempting to identify ten anonymous reviewers on Glassdoor.[36][37] 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.[38] In 2022, the court ordered Glassdoor to disclose the real identity of some reviewers.[3]

Work culture and layoffs

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.[32] 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.[3] The next day, Kraken released a "culture document" which outlined the libertarian values that it asserted were to be obeyed at work.[3] 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.[3] 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.[3][39]

In November 2022, Kraken laid off about 1,100 employees – approximately 30 percent of its workforce.[40]

See also

References

  1. ↑ 1.0 1.1 1.2 "Company Overview of Payward, Inc.". Bloomberg. https://www.bloomberg.com/research/stocks/private/snapshot.asp?privcapid=260965170. 
  2. ↑ "Cryptocurrencies available on Kraken". https://support.kraken.com/hc/en-us/articles/360000678446-Cryptocurrencies-available-on-Kraken. 
  3. ↑ 3.0 3.1 3.2 3.3 3.4 3.5 3.6 3.7 Mac, Ryan; Yaffe-Bellany, David (June 15, 2022). "Inside a Corporate Culture War Stoked by a Crypto C.E.O.". The New York Times. https://www.nytimes.com/2022/06/15/technology/kraken-crypto-culture.html. 
  4. ↑ 4.0 4.1 "Crypto Exchange Kraken Ends Staking Program in $30 Million SEC Settlement" (in en). Bloomberg.com. 2023-02-09. https://www.bloomberg.com/news/articles/2023-02-09/crypto-exchange-kraken-ends-staking-program-in-sec-settlement. 
  5. ↑ "The $8 billion crypto unicorn that crypto loves to hate". https://www.fastcompany.com/90756505/the-8-billion-crypto-unicorn-that-crypto-loves-to-hate. 
  6. ↑ Alpeyev, Pavel (17 August 2014). "Mt. Gox Insider's Kraken Bitcoin Exchange to Open in Japan". Bloomberg News. https://www.bloomberg.com/news/articles/2014-08-17/mt-gox-insider-s-kraken-exchange-to-open-in-japan-next-month. 
  7. ↑ "Sneak Peak: Rising From the Depths of the San Francisco Bay is Kraken". Finance Magnates: Financial and Business News. 3 May 2013. http://www.financemagnates.com/forex/technology/sneak-peak-rising-from-the-depths-of-the-san-francisco-bay-is-kraken/. 
  8. ↑ "Bitcoin exchange Kraken raises millions of dollars". CNET. 25 March 2014. http://www.cnet.com/news/bitcoin-exchange-kraken-raises-millions-of-dollars/. 
  9. ↑ Chernova, Yuliya (26 March 2014). "Big Day for Bitcoin Startups: Three Startups Haul in $23.5M in Funding". Wall Street Journal. https://blogs.wsj.com/venturecapital/2014/03/26/big-day-for-bitcoin-startups-three-startups-haul-in-23-5m-in-funding/. 
  10. ↑ "Bloomberg terminals now track bitcoin prices and virtual currency news". http://finance.yahoo.com/news/bloomberg-terminals-now-track-bitcoin-131839991.html. 
  11. ↑ Mochizuki, Takashi (26 November 2014). "Kraken Bitcoin Operator to Help Liquidate Mt. Gox". The Wall Street Journal. https://blogs.wsj.com/moneybeat/2014/11/25/kraken-bitcoin-operator-to-help-liquidate-mt-gox/. 
  12. ↑ "New dark pool addreses [sic] this major headache for Bitcoin traders". Business Insider. http://www.businessinsider.com/new-darkpool-addreses-this-major-headache-for-bitcoin-traders-2015-6. 
  13. ↑ "Bitcoin exchange for Wall Streeters to close New York operations as part of deal with Kraken". BizJournals.com. https://www.bizjournals.com/newyork/news/2016/01/19/kraken-buys-coinsetter-leaves-nyc-market.html. 
  14. ↑ "Kraken has acquired Dutch Bitcoin exchange CleverCoin" (in en-US). 2016-06-28. https://siliconangle.com/2016/06/28/kraken-has-acquired-dutch-bitcoin-exchange-clevercoin/. 
  15. ↑ Flanagan, Will. "Chicago bitcoin startup Glidera acquired by San Francisco digital currency exchange". Chicago Business Journal. American City Business Journals. http://www.bizjournals.com/chicago/news/2016/12/15/kraken-acquires-glidera.html. 
  16. ↑ "Crypto exchange Kraken acquires trading platform as bitcoin soars". American Banker. https://www.americanbanker.com/news/crypto-exchange-kraken-acquires-trading-platform-as-bitcoin-soars. 
  17. ↑ Chaparro, Frank (23 January 2018). "Bitcoin exchange Coinbase reportedly made more than $1.25 billion in revenues last year". Business Insider Australia. https://www.businessinsider.com.au/coinbase-reportedly-made-more-than-1-billion-in-revenues-last-year-2018-1. 
  18. ↑ "Cryptocurrency Exchange Kraken Pulls Out of Japan". Bloomberg.com. 17 April 2018. https://www.bloomberg.com/news/articles/2018-04-17/cryptocurrency-exchange-kraken-pulls-out-of-japan-citing-costs. 
  19. ↑ 19.0 19.1 Browne, Ryan. "Crypto exchange Kraken to shutter its Japan operations after global layoffs" (in en). https://www.cnbc.com/2022/12/28/crypto-exchange-kraken-to-close-japan-operations-after-mass-job-cuts.html. 
  20. ↑ "Kraken Raises $100 Million, Acquires London Futures Firm". Fortune. http://fortune.com/2019/02/04/kraken-crypto-facilities-jesse-powell/. 
  21. ↑ "Cryptocurrency exchange Kraken raises $13.5M in BnkToTheFuture campaign". SiliconAngle. 25 June 2019. https://siliconangle.com/2019/06/25/cryptocurrency-exchange-kraken-raises-13-5m-bnktothefuture-campaign/. 
  22. ↑ "The First Cryptocurrency Bank" (in en). https://www.natlawreview.com/article/first-cryptocurrency-bank. 
  23. ↑ Tan, Gillian (20 May 2021). "Crypto Platform Kraken Adds Tribe Capital's Sethi to Its Board". Bloomberg. https://www.bloomberg.com/news/articles/2021-05-20/crypto-platform-kraken-adds-tribe-capital-s-sethi-to-its-board?sref=eDGWeidQ. 
  24. ↑ Sigalos, MacKenzie (2021-06-02). "Coinbase rival Kraken launches mobile app in U.S. to capitalize on crypto surge" (in en). https://www.cnbc.com/2021/06/02/kraken-launched-mobile-app-in-us-for-bitcoin-and-ethereum-purchases.html. 
  25. ↑ Kharif, Olga; Yang, Yueqi (21 September 2022). "Crypto Agitator Jesse Powell Steps Down as CEO of Kraken". Bloomberg.com. https://www.bloomberg.com/news/articles/2022-09-21/kraken-co-founder-jesse-powell-steps-down-as-ceo-of-crypto-exchange. 
  26. ↑ "Crypto Exchange Kraken Launches 'Gasless' NFT Marketplace" (in en). https://markets.businessinsider.com/news/currencies/crypto-exchange-kraken-opens-waitlist-for-gasless-nft-marketplace-1031871668. 
  27. ↑ "Crypto exchange Kraken shuts Abu Dhabi office" (in en). Reuters. 2023-02-02. https://www.reuters.com/technology/crypto-exchange-kraken-shuts-abu-dhabi-office-2023-02-02/. 
  28. ↑ Irrera, Anna (27 September 2023). "Crypto Exchange Kraken Plans to Offer Trading in US-Listed Stocks". https://www.bloomberg.com/news/articles/2023-09-27/crypto-exchange-kraken-to-offer-trading-in-us-stocks-rivaling-robinhood-hood. 
  29. ↑ Cheng, Evelyn (19 April 2018). "Kraken cryptocurrency exchange says it will not comply with New York inquiry". CNBC. https://www.cnbc.com/2018/04/19/kraken-cryptocurrency-exchange-says-it-will-not-comply-with-new-york-inquiry.html. 
  30. ↑ Castillo, Michael del (18 September 2018). "New York Attorney General Warns That Kraken Cryptocurrency Exchange Could Be Violating Regulations". Forbes. https://www.forbes.com/sites/michaeldelcastillo/2018/09/18/new-york-attorney-general-warns-kraken-cryptocurrency-exchange-could-be-breaking-the-law/. 
  31. ↑ Rooney, Kate (18 September 2018). "Crypto exchanges are ripe for manipulation and aren't doing much to stop it, New York AG says". CNBC. https://www.cnbc.com/2018/09/18/ny-ag-cryptocurrency-exchanges-are-ripe-for-manipulation.html. 
  32. ↑ 32.0 32.1 Saini, Manya; Lang, Hannah; Kuber, Shailesh (2022-11-29). "Crypto exchange Kraken settles U.S. investigation over alleged Iran sanctions violations" (in en-US). Reuters. https://www.reuters.com/technology/crypto-exchange-kraken-settles-us-investigation-over-alleged-iran-sanctions-2022-11-28/. 
  33. ↑ Weil, Dan. "Bitcoin Exchange Kraken to Pay $1.25M to Settle CFTC Charges" (in en-us). https://www.thestreet.com/investing/kraken-1point25-million-dollar-fine-cftc. 
  34. ↑ Stempel, Jonathan (20 November 2023). "US SEC sues Kraken crypto exchange over failure to register". Reuters. https://www.reuters.com/business/finance/us-sec-sues-kraken-operating-crypto-trading-platform-without-registering-2023-11-20/. 
  35. ↑ Palma, Stefania; Chipolina, Scott (2023-11-21). "Kraken sued by SEC in latest clampdown on crypto exchanges". Financial Times. https://www.ft.com/content/79ddfe02-96b0-4465-8955-ac487005de81. 
  36. ↑ Grothaus, Michael (12 February 2020). "Every employee's worst nightmare, getting outed on Glassdoor, could become a reality.". Fast Company. https://www.fastcompany.com/90463559/every-employees-worst-nightmare-getting-outed-on-glassdoor-could-become-a-reality/. 
  37. ↑ 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. https://www.theregister.co.uk/2020/02/12/kracken_cryptocurrency_eff_glassdoor/. 
  38. ↑ "Payward, Inc. (Kraken) v. Does 1–10". San Rafael, California: Marin County Superior Court. 11 February 2020. https://www.eff.org/cases/payward-inc-kraken-v-does-1-10. 
  39. ↑ Bailey, Kayla (2022-06-17). "CEO of crypto firm Kraken offers severance to 'triggered' employees" (in en-US). https://nypost.com/2022/06/17/ceo-of-crypto-firm-kraken-offers-severance-to-triggered-employees/. 
  40. ↑ Goswami, Rohan (2022-11-30). "Crypto exchange Kraken lays off 1,100 employees". CNBC. https://www.cnbc.com/2022/11/30/crypto-exchange-kraken-lays-off-1100-employees.html. Retrieved 2022-11-30. 

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