Given the current discussion regarding solvency, we wanted to explain the systems we have in place to ensure that assets on our exchange are readily available to you at any time and especially during times of uncertainty.
First, it is important to note that Kraken has no exposure to Alameda Research and we hold about 9,000 FTT tokens on the FTX exchange. We have not listed the FTT token on our spot or futures exchanges and Kraken is not affected by the recent FTX news in any material way.
Kraken’s co-founder and outgoing CEO Jesse Powell discussed the situation with Emily Chang on the Bloomberg Crypto Report.
Second, we are proud to say that Kraken has long taken the lead when it comes to transparency. In fact, we pioneered the use of regular asset audits in 2014 and hired a top-25 global accounting firm, Armanino LLP, to produce two Proof of Reserve audits over the past year alone. These cryptographic audits are more precise and immutable than any other form of financial statement and we are one of the first exchanges to perform them regularly.
Proof of Reserve audits cryptographically prove that we hold the assets we say we hold on your behalf. While this process is almost impossible for traditional financial institutions to conduct, the open and transparent properties of cryptocurrencies enable us to produce these precise audits regularly.
Kraken pioneered the practice and now undergoes Proof of Reserve audits on a semi-annual basis. It has been our way of proving our commitment to protecting the balance you hold on our exchange and staking services. We believe this transparency is absolutely vital to the health of the crypto ecosystem overall and we encourage others to follow our lead.
The audit determined Kraken securely held the eligible assets to levels sometimes in excess of 100 percent of the required balance. In other words, in most cases — we hold exactly what we tell you we hold. You can learn more about our latest Proof of Reserves audit and all of the eligible assets in our blog post here.
Want to check for yourself? If you had funds in your Kraken account during the last Proof of Reserve audit, you can verify your balance by following these steps:
- Sign in to your Kraken account on kraken.com
- Follow this simple 3-step process to generate a “Record ID” or “Merkle Leaf” specific to your Kraken account and this audit
- Enter this “Record ID” on the website of our auditor, Armanino LLP
By following the process above, you’ll affirm your cryptocurrencies were held securely by Kraken at the time of the audit.
If you don’t see a Record ID or Merkle Leaf in your Kraken account, don’t worry. This means you did not have eligible assets on Kraken at the time of our audit. You’ll be able to verify your account balance on eligible assets after future audits, the next of which is planned for early January.
Securing your funds is not just about Kraken’s ability to maintain the highest global standards in cybersecurity. It is also about earning the trust you place in us to protect your assets.
Using data from our audits, you can easily and independently verify that Kraken is worthy of the responsibility of securing your finances.
Kraken is proud to reaffirm our commitment to being fully transparent in how we help maintain your financial freedom — today and into the future. We still believe the safest place for your crypto is in your own wallet but when you trust us with your assets, we will constantly strive to be as transparent and secure as possible.
These materials are for general information purposes only and are not investment advice or a recommendation or solicitation to buy, sell, or hold any digital asset or to engage in any specific trading strategy. Some crypto products and markets are unregulated, and you may not be protected by government compensation and/or regulatory protection schemes. The unpredictable nature of the cryptoasset markets can lead to loss of funds. Tax may be payable on any return and/or on any increase in the value of your crypto assets and you should seek independent advice on your taxation position.