Kraken, the United States-based cryptocurrency exchange, has frozen the accounts associated with “FTX Group, Alameda Research, and their executives,” on its exchange after engaging with authorities.
It has been reported that Kraken said the accounts were frozen “to protect their creditors” and added it “maintains full reserves” and other users’ funds aren’t affected, likely seeking to stamp out fears from users that the exchange might face liquidity issues due to the fund freeze.
However, a Kraken spokesperson said that it had “actively monitored recent developments with the FTX estate” and “are in contact with law enforcement,” saying it froze account access to certain funds “we suspect to be associated with ‘fraud, negligence or misconduct’ related to FTX.”
The spokesperson added:
“We will resolve each account on a case-by-case basis and may seek guidance from the Bankruptcy Court or trustee as appropriate.”
The report said that Kraken’s account freeze comes after crypto exchange FTX announced on November 11 that FTX Group consisting of around 130 companies including its sister trading firm Alameda Research filed for Chapter 11 bankruptcy in the United States, with its founder, Sam Bankman-Fried, resigning as CEO.
Likewise, it also follows a suspected hack on FTX that involved a Kraken account, Kraken’s chief security officer Nick Percoco said on November 12 that they are aware of the account owner’s identity and later gave an update that FTX would make a statement regarding the situation “and them utilizing funds from their verified [Kraken] account to complete this transaction.”
Regulators appear to be hard on FTX and its executives amid the recent turmoil. FTX is headquartered in The Bahamas and the country’s securities regulator on c10 froze the assets of FTX Digital Markets — the exchanges’ Bahamian subsidiary — and its “related parties."
Thus, the Bahamian securities regulator on November 12 denied instructing FTX to prioritize withdrawals of Bahamas-based users after the exchange stated on November 11 that it was instructed by the country’s regulators to facilitate Bahamian withdrawals. FTX is now investigated by the Royal Bahamas Police Force for possible criminal misconduct.