American crypto exchange Kraken is the latest to take action against the embattled FTX and its sister companies.
On Nov. 13, the Kraken exchange announced that it has been in contact with law enforcement regarding the accounts held by the bankrupt FTX group.
It added that it had frozen any accounts linked to FTX, Alameda, and its executives to protect their creditors. Kraken said that its own clients are not affected, and the exchange maintains full reserves.
- The exchange is ranked nineteenth largest by 24-hour volume, according to CoinGecko.
Kraken has spoken with law enforcement regarding a handful of accounts owned by the bankrupt FTX Group, Alameda Research and their executives. Those accounts have been frozen to protect their creditors.
Other Kraken clients are not affected. Kraken maintains full reserves.
— Kraken Exchange (@krakenfx) November 13, 2022
- Several respondents to the tweet asked about Kraken’s reserves and audits. The exchange replied with a link to a page instructing users how to access proof-of-reserves via their Kraken account.
- It did not post them directly, as Binance did last week. Kraken’s audits show that all individual accounts have been audited, it does not allow users to see the overall reserves of the exchange.
- Proof-of-reserves (PoR) has become a hot topic in light of recent events. Exchanges are now scrambling to prove to their customers that they have sufficient funds to back the assets on the platform.
- Crypto was spawned from the 2008 financial crisis in which banks lent out money they didn’t have to high-risk borrowers. The collapse of FTX, which provided highly-leveraged trading on high-risk assets to largely inexperienced retail traders, sounds painfully similar.
- Oracle provider Chainlink touted its own proof-of-reserves system last week. Chainlink PoR was launched in 2020 to allow DeFi platforms to provide immutable evidence of what is backing their assets.
- Former Kraken CEO Jesse Powell criticized FTX founder Sam Bankman-Fried last week, saying that there were several red flags. These included “huge ego purchases” for sports advertising, being too eager to donate and please politicians, and coming to the crypto industry 8 years too late, acting like he knew everything.