Kraken freezes accounts linked to bankrupt FTX and Alameda Research

Key Takeaways

• Kraken stated the accounts were frozen “to protect their creditors” while emphasizing that it “maintains full reserves.”
• FTX has filed for Chapter 11 bankruptcy proceeding, and its CEO Sam Bankman Fried has stepped down

Leading cryptocurrency exchange Kraken has frozen accounts related to “FTX Group and Alameda Research. The latest move comes two days after FTX filed for Chapter 11 bankruptcy protection in the U.S, with its CEO Sam-Bankman Fried also stepping down.

In its official statement, Kraken stated that the accounts were frozen “to protect their creditors” while emphasizing that it “maintains full reserves” and other users’ funds aren’t affected.”Other Kraken clients are not affected. Kraken maintains full reserves’, the tweet reads.

The above statement refers only to a handful of accounts owned or controlled by the bankrupt FTX Group, Alameda Research and their execs. Withdrawals for those accounts were frozen to protect their creditors.

Other Kraken clients are not affected. Kraken maintains full reserves.

— Kraken Exchange (@krakenfx) November 13, 2022

According to a Kraken spokesperson, the exchange froze account access to certain funds they suspect to be associated with ‘fraud, negligence, or misconduct related to FTX.

Commenting on FTX Collapse, Kraken CEO Jesse Powell took to Twitter, stating, “VCs, the media, the ‘experts’ failed,” he said, adding that people “torched their own reputations” vouching for individuals, projects, and businesses they had not done proper due diligence on. “Retail looks to you, presuming that you have done your job. You have a duty to be critical and withhold undue praise,” Jesse continued.

6/ The last few months have been absolutely brutal. Even people who should have known better got rekt. More business failures are sure to come as the contagion spreads. Beyond the industry, lives are destroyed. I pray that we don't lose our people, like we did in the wake of Gox.

— Jesse Powell (@jespow) November 10, 2022

The latest development comes amid bankrupt FTX launching an investigation with law enforcement into a series of unauthorized withdrawals that hit its crypto wallets. Reportedly, some of these funds were moved from Kraken to a wallet used to hold some of the stolen tokens.

Kraken has agreed to assist FTX in the investigation, and its chief security officer Nick Percoco tweeted that they are aware of the account owner’s identity while adding that he could not publicly reveal the user’s identity on social media. 

We know the identify of this account.

— Nick Percoco (@c7five) November 12, 2022

The FTX liquidity crisis, which began in the last week, was plagued with twists and turns.FTX underwent a $16 billion implosion amid reports that co-founder SBF secretly funneled $10 billion of customer funds into his trading company, Alameda Research. As per reports, FTX former CEO Sam Bankman-Fried, co-founder Gary Wang, and its director of engineering Nishad Singh are suspected to be in the Bahamas and are currently “under supervision” by local law enforcement.