Kraken Crypto Platform

Kraken Exchange: A Leading Name in Cryptocurrency Trading

Kraken, officially operating under the name Payward, Inc., is a prominent cryptocurrency exchange headquartered in the United States. Established in 2011, it has grown into a key player in the digital asset industry. Kraken achieved notable milestones, such as being among the first Bitcoin exchanges featured on Bloomberg Terminal, and as of January 2024, the company boasted a valuation of $3 billion. Additionally, Kraken is recognised as the first cryptocurrency platform to obtain a bank charter, although its journey has included regulatory challenges and over $30 million in cumulative fines.

Founding and Early Growth

Kraken was co-founded by Jesse Powell, a graduate of California State University, Sacramento, alongside Thanh Luu and Michael Gronager. Powell’s involvement with the now-defunct Mt. Gox exchange inspired him to create Kraken as a secure alternative. The platform launched in September 2013, initially supporting Bitcoin, Litecoin, and euro trading. Its services quickly expanded to include additional cryptocurrencies and margin trading.

Key Investments and Acquisitions

The company secured $5 million in Series A funding in 2014, led by Hummingbird Ventures and Bitcoin Opportunity Fund. Shortly after, Kraken became one of the first cryptocurrency exchanges featured on Bloomberg Terminal. That same year, it assisted in investigating the collapse of Mt. Gox and launched the first dark pool for Bitcoin trading in 2015.

Kraken grew through strategic acquisitions, purchasing exchanges such as Coinsetter and Cavirtex in 2016, and Dutch-based CleverCoin. It later acquired Crypto Facilities, a British derivatives platform, and the charting tool Cryptowatch. By 2017, the platform experienced rapid growth, registering tens of thousands of new users daily.

Expansion and Innovations

Kraken ventured into the Japanese market in 2014, exited in 2018 due to rising costs, and returned in 2020. In 2020, it became the first U.S. cryptocurrency exchange to secure a Special Purpose Depository Institution (SPDI) charter in Wyoming. The company has also launched products like a mobile app, an NFT marketplace, and its proprietary Kraken Wallet, which supports multiple blockchains.

In 2023, Kraken deepened its European presence, obtaining licenses in Ireland, Italy, and Spain, while acquiring the Dutch exchange Coin Meester B.V. The company also announced plans to introduce trading in traditional securities like U.S.-listed stocks and ETFs.

Challenges and Regulatory Scrutiny

Kraken’s regulatory journey has been turbulent. In 2018, it faced criticism from the New York Attorney General’s Office over its noncompliance with an investigation into customer protection measures. Since then, it has dealt with numerous regulatory investigations and penalties, including a $30 million settlement with the SEC in 2023 over its staking services. It has also faced scrutiny over alleged violations of sanction regimes and unregistered margin trading.

Work Culture and Organisational Changes

Kraken’s workplace culture, emphasising libertarian values, has sparked debate. The company released a controversial culture document in 2022, prompting some employees to leave voluntarily. It also underwent significant layoffs, reducing its workforce by 30% in late 2022 and an additional 15% in 2024 as part of a restructuring effort. Co-CEO Arjun Sethi joined during this period to steer the company forward.