Former Kraken employee files lawsuit

Got some court documents here: https://www.docdroid.net/rbU65Yu/07071236.pdf And here's a summary of the allegations: https://davidgerard.co.uk/blockchain/2019/12/17/kraken-exchange-sued-by-whistleblowing-ex-employee-allegations/ What do you all think about this? Seems like the whistleblower really spilled the beans on what we’ve suspected about exchanges for a while now. They’re definitely pulling some shady moves to fit their own stories, especially with how Runyon discovered that the exchanges are missing millions.

There's no end to the crap an embittered ex employee will pull and they'll be fully conscious of the effect stories like this will have on anything crypto related. All the same no one has the slightest clue what goes behind the scenes at a crypto exchange so it could be unimaginably worse for all we know. I'll continue dipping in to Kraken when necessary and running away as quickly as possible.

Only in the US wherein I see employees suing their former employee for wrongly termination. Here, the process will take years and there's no assurance that you can win. Anyways, let's see what the court gonna say, I mean his story might be true, but we don't know until facts are presented. yes, we could all suspect that something fishing might be going behind the scene, but I don't know that if he was terminated because he unravel the scheme.

Kraken’s CFO certainly comes off as a shady character. My curiosity has been piqued. The bit about him using the plaintiff's home address for legal and regulatory filings is bizarre. We can't know whether the whistle blowing stuff is true, but Runyon's lawyer can attest to that one.

Of all the established exchanges I'd be least surprised if Kraken turned out to be the slackest. You don't hear very much at all about their regulatory efforts compared to places like Gemini and Coinbase. If this bloke was alleging the same about Coinbase I'd consider it total bilge. It doesn't feel outside the bounds of reality for Kraken. But still I'll believe it when I see it.

I've got similar feelings. Kraken has always seemed more slippery than the other American exchanges. Their response to the NYAG inquiry and complaints about US regulatory burdens definitely put them in Bitfinex's league, not Coinbase's. They used to work with the likes of Crypto Capital too. Nevertheless, I never take claims like this at face value. There is always more to the story.

I don't see anything suspicious in these remarks, there's probably no single country which has been more detrimental to Bitcoin's growth and adoption. Back when Mark Karpeles was thinking about reviving Mt. Gox, he estimated US compliance costs to be 10x as high as those of Europe and Japan (combined): https://blog.magicaltux.net/article/MtGox-Bankruptcy

This will just be a walk in the park for any prosecutor holding this case since if everything check in woth what he is saying Kraken will be found guilty of illegaly operating in those countries. Proving that they have customers in those country is also easy since they will have records of it found both inside Kraken's database. Aside from that cases like this where too many moving pieces are involved is hard to cover up and I don't think Kraken's lawyers will have a lot of excuses to used in where Runyon is not the only evidence/witness against them.

That's certainly a bit off isn't it? Using employees address? If I'm Runyon then definitely there's some red flag in it already. The CFO might thought that Runyon will just play all along. Lot's of shady practice was exposed here and perhaps many exchanges are doing the same as well but no one came forward because they either afraid or they are being paid handsomely to somewhat keep quiet. I guess this case could drag for months before we can finally see who is telling the truth.

I can agree with that. That's not the issue. Can you imagine Coinbase or Gemini making such remarks? Publicly calling a questionnaire from the NYAG "abuse" and saying any exchange who responds is "kowtowing?" I can't. Coinbase and Gemini actually welcome burdensome regulation because it suppresses their smaller competitors. For Gemini, it's even a marketing ploy: Bitfinex is the only other exchange I can think of that is needlessly inflammatory in its public statements. Between what they say publicly and who they do business with, they are both in a different league than the squeaky clean exchanges like Gemini.

Sure, I can agree with that. In that regard Kraken might be a bit closer to Bitfinex than Gemini/Coinbase. Yeah, I remember those ads + Winklevosses calling for more regulation.

Millions of dollars short.  You would think one of these exchanges wouldn't use their commission funds and cold wallets to gamble.  Or...well...how does "millions of dollars" just go missing?  What's going to be left?   I'm really tired of this.  Someone's going to have to admit this was all about a reddit joke someday or something like that.  This isn't an argument where you just try and shout at people to make 200 million dollar insults in the market trying to buy bitcoin at bad times.

Regardless of whether he's telling the truth or not, is it possible for Kraken to try to settle out of court? This is just a discrimination suit after all. If so, what will happen to the shady business practices allegations? I imagine regulators are going to be watching this very closely, but I don't know if they could actually use a dropped lawsuit as a basis for an investigation.

It may not be so bad. I used to reconcile lots of bank accounts for a law firm and its clients. It wasn't uncommon to find discrepancies worth 6 or 7 figures. Embezzlement usually wasn't the reason, just missing or erroneous database entries. This guy definitely didn't have full forensic access to Kraken's accounts, so while his concerns seem legitimate, we need to take them with a grain of salt.

This is a precedent if I'm not mistaken, so we can't really say if this could be settled out of court, but I wouldn't be surprised if Kraken did with non-disclosure agreement to silent and let this issue settle down and be forgotten. For sure regulators are going to keep a close eye on it and see what this precedent affect allegations from former employees.

Oh, thanks for the information.

So how many Federal banking regulations supposedly Kraken violated here? Falsifying business records or business address is already a crime right? If I'm the whistle blower, I wouldn't go for out of settlement though, he already drag himself here so why the hell will he do that?

Well, right now it's a he said, she said situation. I have tended to see Kraken as among the more legitimate exchanges, but I suppose corruption can happen within any sizeable financial institution. Fortunately, the U.S. has employment laws that allow employees and former employees to challenge their employers. Over time, we may learn more as court documents are released to the public. However, it's worth keeping in mind that there is a presumption of innocence in the U.S.

That would certainly be very, very interesting. The potential of this happening alone should be sufficient to prompt some users to run from the exchange. It's definitely not good for Kraken's point of view if they were indeed running on fractional reserves. I also don't see the benefit of the accuser lying, which suggests to me that there is a high probability that what is being said is true. Anyhow, just beware of Kraken for now, as they could certainly be running a fractional reserve, which is prone to runs.

We really can't say for certain what's the real intention of Runyon here. Right, I do hope that they are not the next exchange to 'shutdown' because of the pending case, but to be on the safe side, I wouldn't put put some of my money on Kraken because of the ongoing issues.