Updated on January 26, 2023 5:38 AM
On November 13, Kraken wrote on Twitter that the accounts were frozen "to protect their creditors," that it "maintains full reserves," and that other users' funds are unaffected. Kraken was probably attempting to allay user concerns that the exchange might experience liquidity problems due to the fund freeze.
It's important to remember that Kraken had claimed in a tweet that these accounts were linked to "fraud, carelessness, and misconduct." It adds,
"We will handle each account on an individual basis and, as necessary, may seek advice from the Bankruptcy Court or trustee."
Kraken, however, has since removed this tweet. Kraken, in contrast, tweeted that none of the exchange's other clients were impacted besides the accounts connected to FTX and Alameda Research.
"Regarding a few accounts held by the insolvent FTX Group, Alameda Research, and their leaders, Kraken has spoken with law police. To safeguard their creditors, those accounts have been frozen.Other Kraken clients are unaffected, kraken keeps its supplies stocked," stressed Kraken.
A Kraken representative told that the company had "actively monitored recent developments with the FTX estate" and was "in contact with law enforcement." The spokesperson added that the company had frozen account access to funds that it "suspected to be associated with 'fraud, negligence, or misconduct related to FTX."
The statement continued,
"We will handle each account on a case-by-case basis and may seek advice from the Bankruptcy Court or trustee as necessary."
Kraken's account suspension follows the crypto exchange FTX's November 11 announcement that the FTX Group, which comprises about 130 businesses, including its sister trading company Alameda Research, had filed for Chapter 11 bankruptcy in the United States, with its founder Sam Bankman-Fried stepping down as CEO.
On November 12, Kraken's chief security officer Nick Percoco stated that they are aware of the identity of the account owner and later updated that FTX would issue a statement regarding the situation "and them utilizing funds from their verified [Kraken] account to complete this transaction."
Twitter users saw that the exchange's wallets were depleted after FTX filed for bankruptcy. The improper transactions were subsequently confirmed by Ray, the new CEO, and chief restructuring officer of FTX.
Additionally, as observed by Twitter users, money was sent from Kraken to a wallet with some of the stolen tokens. We know the identity of this user, Nick Percoco, Kraken's chief security officer, tweeted a few hours later. He pointed out that he could not openly divulge the user's identity on social media.
"Following the Chapter 11 bankruptcy filings — FTX US and FTX.com started precautionary actions to relocate all digital assets to cold storage,"
FTX general counsel Ryne Miller said on Saturday. This evening, the procedure was sped up to prevent more harm after discovering fraudulent transactions.
Miller then cited the new FTX CEO as saying:
"Unauthorized access to specific assets has happened, as is publicly known. We are collaborating with law enforcement and the appropriate regulators after having contact with them."
The Bahamas' securities regulator on November 10 seized the assets of FTX Digital Markets, the exchanges' Bahamian affiliate, and its "associated parties." FTX is headquartered in The Bahamas.
After the exchange claimed on November 11 that it had been told by the nation's regulators to facilitate Bahamian withdrawals, the Bahamian securities authority on November 12 denied giving FTX instructions to give Bahamas-based users' withdrawals priority.
According to a November 13 report, the Royal Bahamas Police Force is looking into FTX for potential criminal activity.