The man contacted Canadian police, who told him the assets had been transferred out of the country and that they were unable to trace it.
Man reports losing $100,000 to website spoofing a crypto exchange
A man who received an inheritance in 2021 and decided to put it into crypto lost his entire $100,000 balance when he fell victim to a spoofing site in 2023. When he decided to withdraw the tokens, he Googled to find the Kraken crypto exchange where he had purchased them, and clicked on a result. However, despite the fact that it "was the first one to come up and it was branded with the same colours", the man clicked on a phishing website designed to mimic the Kraken exchange. Minutes after entering his credentials, his real Kraken account was drained. "This is money we don't have to spare," said the man. "I have three kids to put through college and this has been quite disruptive in the family."
Kraken fined $5.1 million by Australian securities regulator
The US-based cryptocurrency exchange Kraken has been fined AU$8 million (US$5.1 million) for illegally offering margin trading to Australian customers. The firm had offered the margin product to more than 1,100 Australians without first undergoing the process to determine if the products were appropriate for retail customers.
The more than 1,100 customers lost more than US$5 million. While some of the customers were likely sophisticated investors, Kraken made no effort to limit the product to such a group. Around 81% of the customers who used Kraken's margin product lost money.
This is far from Kraken's first run-in with regulators. The company has settled with US regulators over sanctions violations and failure to comply with securities regulations pertaining to its staking product. They also have an open lawsuit from the US SEC over alleged unregistered securities offerings and commingling corporate and customer funds.
- "Kraken crypto exchange operator to pay $8 million following ASIC enforcement action", Australian Securities and Investments Commission press release
CertiK and Kraken accuse each other of misconduct over bug report and $3 million "testing"
Prominent blockchain security firm CertiK has accused American cryptocurrency exchange Kraken of threatening them after they reported a bug. According to CertiK, they discovered a bug in the exchange software, which they tested with multiple transactions over several days. Some of these were large transactions, which CertiK said they performed to test whether Kraken had alerting in place to detect higher-value transfers. When they reported the vulnerability to the exchange, they say the exchange patched the bug, but then threatened CertiK employees and demanded they repay a "mismatched" amount of crypto allegedly taken during the testing period.
However, others have noted that the number of transactions and amount of cryptocurrency taken by CertiK while "investigating" the bug seems to far exceed the norm for whitehat security researchers, and that they took cryptocurrency amounting to millions of dollars — making their "testing" look a lot more like a blackhat theft. Furthermore, CertiK made several transfers to Tornado Cash as part of their "testing" — an entity that is sanctioned by the United States.
Kraken alleged that CertiK did not disclose the full extent of their employees' transactions, and refused to return the $3 million they had taken. They also alleged that CertiK had attempted to extort them. Kraken said they had been in contact with law enforcement, and were "treating this as a criminal case".
Ultimately, CertiK returned the funds. However, it's not clear if criminal action may be ongoing.
Kraken sued by U.S. SEC
Kraken is the latest cryptocurrency exchange to face a lawsuit from the U.S. Securities and Exchange Commission. According to the SEC, Kraken violated securities laws by listing tokens like Polygon (MATIC) and Solana (SOL), which the SEC has argued in this and in other lawsuits are unregistered securities.
Furthermore, the SEC claims that Kraken commingled corporate and customer funds, "at times pa[ying] operational expenses directly from bank accounts that hold customer cash."
Kraken's new CEO, Dave Ripley, posted on Twitter that the company "plan[s] to vigorously defend [their] position" that they do not list securities.
Kraken ordered to turn over user information to U.S. tax investigators
Bad news for wealthy crypto traders on Kraken, who previously might have hoped to evade paying taxes on their past crypto trades. A judge has ordered the exchange to turn over information to the U.S. Internal Revenue Service on users who engaged in at least $20,000 in trades in any year between 2016 and 2020.
Although Kraken argued against the order, describing it as an "unjustified treasure hunt", the judge determined that the IRS was justified in its request, and ordered Kraken to cough up the records. The IRS alleged that although the exchange has more than 4 million users, and has processed $140 billion in trades since its inception in 2011, only 288,330 of those users have filed tax returns.
Kraken to suspend ACH transfers after Silvergate collapse
The Kraken cryptocurrency exchange announced to its users that it will be suspending ACH transfers on March 27, as a result of the collapse of its banking partner, Silvergate. Based on their communications, it sounds like they have been unsuccessful in finding a new banking provider since Silvergate's March 8 collapse, which will impact customers' abilities to perform bank transfers to and from the exchange.
Kraken ends staking, pays $30 million fine in settlement with U.S. SEC
U.S. cryptocurrency exchange Kraken has reportedly agreed to close up shop on its crypto staking operation and pay a $30 million fine to the U.S. Securities and Exchange Commission. This comes shortly after the news that the SEC was probing the exchange, and rumors from Coinbase CEO Brian Armstrong that the SEC was looking to "get rid of crypto staking in the U.S. for retail investors".
According to the SEC, Kraken had failed to register its staking-as-a-service program, which had generated $147 million in revenue.
This is not Kraken's first run-in with authorities, after paying a $360,000 fine to OFAC in November for sanctions violations.
Kraken pays over $360,000 to settle violations of sanctions against Iran
The US cryptocurrency exchange Kraken settled charges from the Office of Foreign Assets Control (OFAC) alleging that they had violated sanctions against Iran. In the agreement, Kraken will pay $362,158.70 for the potential civil liability, and agree to commit $100,000 in various compliance controls.
The OFAC investigation was first revealed in July, in reporting from the New York Times.
- Settlement Agreement between the U.S. Department of the Treasury’s Office of Foreign Assets Control and Payward, Inc. ("Kraken"), U.S. Department of the Treasury
Kraken lays off 1,100 employees in 30% cut
The US cryptocurrency exchange Kraken announced that it had laid off 30% of its employees, or about 1,100 people. They blamed "macroeconomic and geopolitical factors" resulting in less trading and fewer clients. "Unfortunately, negative influences on the financial markets have continued and we have exhausted preferable options for bringing costs in line with demand," they wrote.
Crypto executive exodus continues
The wave of crypto executives stepping down from their roles is continuing, after Genesis' CEO left the company and Michael Saylor gave up his CEO title (but stayed on as chairman) in August.
Now, Genesis' managing director has stepped down after five years. Kraken CEO Jesse Powell relinquished his title, planning to remain at the firm as a chairman. Alex Mashinsky has resigned as the CEO of Celsius Network in the midst of bankruptcy proceedings. And FTX US president Brett Harrison will also be stepping down.
- "Genesis director to step down and move into advisory role", Cointelegraph
- "C.E.O. of Kraken, the Cryptocurrency Exchange, Steps Down", The New York Times
- "C.E.O. of Celsius, the Crypto Bank, Resigns", The New York Times
- "Brett Harrison will step down as FTX US president, move into advisory role", Cointelegraph