FTX-related fraud, negligence, or misconduct have caused Kraken to freeze accounts associated with certain funds.
FTX Group and Alameda Research
Following consultation with authorities, cryptocurrency exchange Kraken has frozen accounts associated with “FTX Group and Alameda Research”.
It said on Nov. 13 that the exchange had frozen the accounts “to protect creditors,” that it had “maintained full reserves”, and that other users’ funds weren’t affected, likely attempting to trim fears among users that the exchange would suffer liquidity issues because of the fund 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
It has been actively monitoring the FTX estate and “we are in contact with law enforcement” regarding recent developments. According to Kraken, certain funds have been frozen as they were suspected of being associated with FTX fraud, imprudence, or misconduct.
Each case-by-case account will be resolved on a case-by-case basis, and the Bankruptcy Court or trustee may be consulted as needed,” the spokesperson said.
Related: Securities regulators in the Bahamas freeze FTX assets
Following FTX’s announcement of bankruptcy on Nov. 11, Kraken’s account freeze follows Alameda Research’s announcement that founder Sam Bankman-Fried has resigned as CEO of FTX Group, consisting of roughly 130 companies.
A Kraken account is also suspected of having been hacked on FTX. According to Kraken’s chief security officer Nick Percoco, the identity of the account owner is known to them. He later informed us that FTX would release a statement regarding the situation. “They use funds from their verified Kraken account to carry out this transaction.”
The recent turmoil has led regulators to crack down on FTX and its executives.
FTX Digital Markets, the exchange’s subsidiary in The Bahamas, and its “related parties” had their assets frozen by the country’s securities regulator on Nov. 10.
Related: Tether has frozen a 48 million USDT asset on Tron Owned by FTX
Following FTX’s statement on Nov. 11 that it had been instructed by the country’s regulators to facilitate Bahamian withdrawals, the Bahamian securities regulator denied instructing FTX to prioritize withdrawals from Bahamas-based users.
A Nov. 13 report states that FTX is now being investigated for possible criminal misconduct by the Royal Bahamas Police Force.
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