Kraken – a popular cryptocurrency exchange founded by Jesse Powell in 2011 – recently offered its books to reviewers to show them The company has huge reserves of BTC, ETH and Tether on file.
The Kraken has tried to do a lot of good
Kraken was founded in San Francisco, California, which appears to be the ultimate hosting ground for many crypto companies, considering it’s been such a long time since Coinbase was based before deciding that it would be operating at a far-flung company during the COVID pandemic. Kraken was also set up as a way to offset the damage done by Mt.Gox, a shady cryptocurrency exchange in Japan that was responsible for one of the biggest security flaws in space history.
In February 2014, Mt.Gox saw more than $400 million of BTC funds disappear overnight, with very little of that money being recovered or repaid at press time. Kraken sought a way to help those affected, and so the exchange came to fruition nearly three years after the infamous incident.
Powell even traveled to Japan after this happened to see if he could help in person. He says that if audits had taken place then as they do now, the damage could have been easily minimized. Unfortunately, Mt. Gox exists at a time when the crypto market is in a state of birth, and very few people know how to accurately handle the space.
Powell said in an interview:
The biggest explosions were those cases, like Mount Gox, or Quadriga, where they had been insolvent for years. As no one knew, the problem was able to get worse as exchange operators felt they could get themselves out of the hole, perhaps by returning to full reserves or profitability.
Audits can still be improved
Despite the growth in cybersecurity and advances in encryption technology, Powell says things are still not exactly where they need to be, and there are many areas where audits could improve. He said:
One criticism of our first audit in 2014 was that this was just a point in time. You don’t know if we just borrowed 100,000 bitcoins from one of our investors or something to do that shot, and then, you know, send them back in five minutes…if you do [release attestations] Oftentimes, doing these kinds of things is less likely to happen and more likely to be spotted. Let’s say, for example, that you see 100,000 coins moving, you know, on the 30th of every month on the chain.
Powell recently logged on to tell people that they should never discount bitcoin – despite its late price – and continue to buy more units whenever he gets the chance.
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