Kraken is a United States–based

cryptocurrency exchange A cryptocurrency exchange, or a digital currency exchange (DCE), is a business that allows customers to trade cryptocurrencies or digital currencies for other assets, such as conventional fiat money or other digital currencies. Exchanges may acce ...

and

bank A bank is a financial institution that accepts deposits from the public and creates a demand deposit while simultaneously making loans. Lending activities can be directly performed by the bank or indirectly through capital markets. Becau ...

, founded in 2011. It was one of the first bitcoin exchanges to be listed on

Bloomberg Terminal The Bloomberg Terminal is a computer software system provided by the financial data vendor Bloomberg L.P. that enables professionals in the financial service sector and other industries to access Bloomberg Professional Services through which u ...

and is reportedly valued at $10.8 billion USD, as of mid-summer 2022. As of 2020, Kraken had US$1.1 billion in revenue.

History

Kraken was co-founded in 2011 by Jesse Powell, an alumnus of

California State University, Sacramento California State University, Sacramento (CSUS, Sacramento State, or informally Sac State) is a public university in Sacramento, California. Founded in 1947 as Sacramento State College, it is the eleventh oldest school in the 23-campus Californi ...

with Thanh Luu. 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. In September 2013, Kraken was launched, offering

Bitcoin Bitcoin ( abbreviation: BTC; sign: ₿) is a decentralized digital currency that can be transferred on the peer-to-peer bitcoin network. Bitcoin transactions are verified by network nodes through cryptography and recorded in a public di ...

Litecoin Litecoin ( Abbreviation: LTC; sign: Ł) is a decentralized peer-to-peer cryptocurrency and open-source software project released under the MIT/X11 license. Inspired by Bitcoin, Litecoin was among the earliest altcoins, starting in October 2011. ...

, and euro trades initially before going on to add additional currencies and margin trading. A few months earlier, Kraken had joined other US Bitcoin players to form the "Committee for the Establishment of the Digital Asset Transfer Authority" as the self-regulatory group of the industry. In March 2014, Kraken received a $5 million Series A investment from Hummingbird Ventures and Bitcoin Opportunity Fund. A month later, Kraken became one of the first bitcoin exchanges to be listed on Bloomberg Terminal. 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. In June 2015, Kraken opened the first

dark pool In finance, a dark pool (also black pool) is a private forum (alternative trading system or ATS) for trading securities, derivatives, and other financial instruments.SBI Group and acquired Dutch exchange CleverCoin, and Glidera, a

cryptocurrency wallet A cryptocurrency wallet is a device, physical medium, program or a service which stores the public and/or private keys for cryptocurrency transactions. In addition to this basic function of storing the keys, a cryptocurrency wallet more often al ...

service. In March 2017, Kraken acquired Cryptowatch, a charting and trading platform. By December 2017, Kraken claimed to be registering up to 50,000 new users a day. In April 2018, Kraken announced closure of its services in Japan due to the rising costs of doing business. In February 2019, Kraken acquired Crypto Facilities, a British derivatives trading firm. In June 2019, Kraken received $13.5 million from 2,263 individual investors via a

special-purpose vehicle A special-purpose entity (SPE; or, in Europe and India, special-purpose vehicle/SPV; or, in some cases in each EU jurisdiction, FVC, financial vehicle corporation) is a legal entity (usually a limited company of some type or, sometimes, a limite ...

. 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. In early 2021, Kraken sought additional funding from investors at a valuation of over $20 billion, with

Tribe Capital Tribe Capital is an American venture capital firm. Founded in 2018 as a spinoff of Social Capital, company "deploys capital in early stage to late-stage start-ups as well as mature companies via venture, growth equity and loan vehicles," backing ...

becoming the company's second largest

institutional investor An institutional investor is an entity which pools money to purchase securities, real property, and other investment assets or originate loans. Institutional investors include commercial banks, central banks, credit unions, government-linked co ...

behind Hummingbird Ventures and Arjun Sethi being appointed to the board of directors. In January 2021, Kraken released a mobile app for international users, which became available in the US in June 2021. In January 2022, Kraken announced its plans to develop an NFT marketplace. On September 21, 2022, Kraken announced that Powell would be stepping down as CEO to spend “more of my time on the company’s products, user experience and broader industry advocacy.” Powell, who will assume the role of chairman of Kraken’s board of directors, will be replaced as CEO by Dave Ripley, the company’s chief operating officer. In November 2022, Kraken announced it had identified the hacker of rival exchange

FTX FTX Trading Ltd., commonly known as FTX (short for "Futures Exchange") is a bankrupt company that formerly operated a cryptocurrency exchange and crypto hedge fund. The exchange was founded in 2019 and, at its peak in July 2021, had over one mi ...

, and would assist law enforcement in its investigation into the theft of more than $400 million in FTX assets. That same month, the company launched a beta version of its non-fungible token (NFT) marketplace featuring 70 Ethereum- and Solana-based collections. On November 30, 2022, CEO Powell announced the

layoff A layoff or downsizing is the temporary suspension or permanent termination of employment of an employee or, more commonly, a group of employees (collective layoff) for business reasons, such as personnel management or downsizing (reducing the ...

of 1,100 employees, or approximately 30 percent of the employees, "in order to adapt to current market conditions."

Controversies

Government regulations

In April 2018, Kraken refused compliance with an investigation by the New York Attorney General's Office regarding the measures taken by

s to protect their customers from

market manipulation In economics and finance, market manipulation is a type of market abuse where there is a deliberate attempt to interfere with the free and fair operation of the market; the most blatant of cases involve creating false or misleading appearan ...

and

money laundering Money laundering is the process of concealing the origin of money, obtained from illicit activities such as drug trafficking, corruption, embezzlement or gambling, by converting it into a legitimate source. It is a crime in many jurisdiction ...

, finding the associated expenditure to be bad for business. 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 The New York State Department of Financial Services (DFS or NYSDFS) is the department of the New York state government responsible for regulating financial services and products, including those subject to the New York insurance, banking and fina ...

for potential violation of local virtual currency regulations. In March 2019, the exchange came to be investigated by the

Office of Foreign Assets Control The Office of Foreign Assets Control (OFAC) is a financial intelligence and enforcement agency of the U.S. Treasury Department. It administers and enforces economic and trade sanctions in support of U.S. national security and foreign policy ...

for potential violation of sanction-regimes by allowing trade with customers based in Iran; as of November 2022, Reuters reports that a settlement was reached between Kraken and OFAC, and Kraken has paid a fine of $362,000 in addition to agreeing to "invest an additional $100,000 in certain sanctions compliance controls." In late September 2021, Kraken was ordered to pay a fine of $1.25 million to the

Commodity Futures Trading Commission The Commodity Futures Trading Commission (CFTC) is an independent agency of the US government created in 1974 that regulates the U.S. derivatives markets, which includes futures, swaps, and certain kinds of options. The Commodity Exchange Act ...

for offering unregistered margin trading.

Identifying Glassdoor reviewers

In May 2019, Kraken filed a motion in California's Marin County Superior Court to identify ten anonymous reviewers on

Glassdoor Glassdoor is an American website where current and former employees anonymously review companies. Headquartered in San Francisco, California, it has additional offices in Chicago, Dublin, London, and São Paulo. Glassdoor also allows its users to ...

. Kraken is suing them, for allegedly breaching their severance contract. The

Electronic Frontier Foundation The Electronic Frontier Foundation (EFF) is an international non-profit digital rights group based in San Francisco, California. The foundation was formed on 10 July 1990 by John Gilmore, John Perry Barlow and Mitch Kapor to promote Internet ...

, which represents the anonymous reviewers, claims that identifying the reviewers would harm their

First Amendment First or 1st is the ordinal form of the number one (#1). First or 1st may also refer to: *World record, specifically the first instance of a particular achievement Arts and media Music * 1$T, American rapper, singer-songwriter, DJ, and reco ...

free-speech rights and

chill In computing, CHILL (an acronym for CCITT High Level Language) is a procedural programming language designed for use in telecommunication switches (the hardware used inside telephone exchanges). The language is still used for legacy systems ...

the expression of others. The court has since ordered Glassdoor to disclose the real identity of some reviewers.

Work culture

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. In June 2022, Powell urged employees in a work-meeting to reject the usage of

preferred gender pronouns Preferred gender pronouns or personal gender pronouns (often abbreviated as PGP) are the set of pronouns (in English, third-person pronouns) that an individual wants others to use in order to reflect that person's gender identity. In English, wh ...

; he then opened a Slack channel to debate why people shall be allowed to choose their gender but neither race nor ethnicity. The next day, Kraken released a "culture document" which outlined the

libertarian Libertarianism (from french: libertaire, "libertarian"; from la, libertas, "freedom") is a political philosophy that upholds liberty as a core value. Libertarians seek to maximize autonomy and political freedom, and minimize the state's e ...

values at the core of Kraken that were to be obeyed at work. 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. 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.

References

External links

* {{Cryptocurrencies, state=expanded 2011 establishments in California Banks based in Wyoming Bitcoin companies Bitcoin exchanges Companies based in San Francisco Digital currency exchanges