For crypto enthusiasts, Kraken has been known as one of the most reliable exchanges out there. But a recent incident has some in the cryptocurrency community questioning whether or not that is an accurate assessment. On Friday, June 1, a strange blip in the Kraken realm got people talking. It was a flash crash for the bitcoin and CAD (Canadian dollar) pairing, with prices plummeting to $100, and most people never would have noticed it had it not been for an eagle-eyed crypto trader. Nick Cole was one of the first people to bring the issue to the attention of Twitter, so perhaps it’s not shocking that traders quickly started coming up with theories for what happened.
It was a Twitter user named Beetcoin that ended up formulating the most likely theory. He noticed that on Kraken, the pairing of CAD and BTC seemed like one of the least liquid. With very few buy orders passing the $5,000 mark, a savvy individual could wreck the pairing. Based upon the evidence we now have, it seems as if a hacker compromised what investors call a “whale” account”—in other words, the account of someone who was holding an astonishing 1,200 BTC. As of today, that breaks down to over 10 million American dollars. Because of the actions the hacker needed to take in order to send the funds to his or her own account, people were able to see the very quick dip in price.
Although Kraken does have KYC (know your customer) protocols, crypto hackers these days have been very enterprising. One tech worker, Sean Coonce, recently detailed the way in which his Coinbase account was hacked in a SIM port attack. Basically, someone else was spoofing his phone and was able to take control of his crypto account and even his email. It’s not entirely impossible that something similar happened to this unfortunate Kraken customer, which is why it is crucial for crypto enthusiasts to realize that their assets are not really safe on any exchange that is connected to the internet.
