Given the current discussion regarding solvency, the team at Kraken wanted to explain the systems they have in place “to ensure that assets on [their] exchange are readily available to you at any time and especially during times of uncertainty.”
First, it is important to note that Kraken claims it “has no exposure to Alameda Research and [they] hold about 9,000 FTT tokens on the FTX exchange.” Kraken adds that they “have not listed the FTT token on [their] 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 has now commented on the situation.
Kraken also noted that they are “proud to say that Kraken has long taken the lead when it comes to transparency.” In fact, they claim to have “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 claims it “pioneered the practice and now undergoes Proof of Reserve audits on a semi-annual basis.” It has been their way of proving their commitment “to protecting the balance you hold on [their] exchange and staking services.”
Kraken believe this transparency “is absolutely vital to the health of the crypto ecosystem overall and we encourage others to follow [their] 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 — Kraken “hold exactly what we tell you we hold.”
As noted in the update, 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.”
The firm concluded:
“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.”
For more details on this update, check here.