Kraken exchange freezes accounts related to FTX and Alameda
Kraken claimed it froze account access to certain funds “we think to be involved with ‘fraud, carelessness, or misconduct’ relating to FTX.”
After consulting with authorities, the cryptocurrency exchange Kraken in the United States has frozen the accounts associated with “FTX Group, Alameda Research, and their executives” on its platform.
Kraken claimed in a tweet on Nov. 13 that the accounts were blocked “to protect their creditors” and that it “maintains full reserves” and other customers’ funds aren’t affected, likely to allay user concerns that the exchange would experience liquidity challenges as a result of the cash freeze.
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
A Kraken spokesperson said that the exchange has “actively monitored recent developments with the FTX estate” and is “in contact with law enforcement,” adding that it has frozen account access to certain funds “we suspect to be associated with ‘fraud, negligence, or misconduct’ related to FTX.”
“We will resolve each account on a case-by-case basis and, as required, seek direction from the Bankruptcy Court or trustee,” the representative continued.
Kraken’s account freeze comes after crypto exchange FTX announced on November 11 that FTX Group, which includes sibling trading firm Alameda Research, filed for Chapter 11 bankruptcy in the United States, with its founder Sam Bankman-Fried leaving as CEO.
It also comes in the wake of a suspected FTX hack involving a Kraken account. Kraken’s chief security officer Nick Percoco stated on November 12 that they are aware of the account owner’s identity and later provided an update that FTX would make a statement regarding the situation “and then utilize funds from their verified [Kraken] account to complete this transaction.”
In the midst of the recent turbulence, regulators appear to be cracking down hard on FTX and their leadership.
The Bahamas’ securities regulator froze the assets of FTX Digital Markets, the exchange’s Bahamian subsidiary, and its “related parties” on November 10.
On Nov. 12, the Bahamas’ securities regulator denied asking FTX to prioritize withdrawals from Bahamas-based users, following the exchange’s statement on Nov. 11 that it had been told by the country’s regulators to facilitate Bahamian withdrawals.
According to a Nov. 13 report, FTX is currently being investigated by the Royal Bahamas Police Force for alleged criminal activities.
