Kraken CEO Jesse Powell’s lunacy as exchange that banned BSV pump air back into Terra

Getting your Trinity Audio player ready...

Jesse Powell’s decision to list the new LUNA2 token on his Kraken cryptocurrency exchange reeks of hypocrisy and highlights his willingness to apply the word ‘scam’ only to projects that don’t earn him money.

Last weekend saw the launch of the ‘Terra 2.0’ blockchain and LUNA2, the phoenix token supposedly rising from the still-smoldering ashes of the LUNA/UST fiasco. The ‘algorithmic stablecoin’ UST lost its peg to the U.S. dollar last month, triggering a plummet in the value of the affiliated LUNA token that ultimately led to the complete collapse of both assets. The crash resulted in countless thousands of LUNA/UST holders losing tens of billions of dollars (and the hits just keep on coming).

Predictably, some familiar faces connected to the LUNA/UST debacle have attempted to Jedi mind trick everyone into believing that they had no warning of its fatal flaws. Binance boss Changpeng ‘CZ’ Zhao recently stated that, despite being an early investor in Terraform Labs and Binance being its biggest liquidity provider, he really didn’t “know [UST] too well” (which stretches credulity to a point where even Jean-Claude van Damme’s famously flexible groin would snap).

On Tuesday, Fortune quoted CZ saying that he’d “never spoken to [Terra founder] Do Kwon directly.” CZ then gave his own company a mild tut-tutting, saying “we should definitely do a better job in terms of due diligence” when deciding which tokens to list. However, this performative second-guessing didn’t stop Binance from listing LUNA2 this week, with CZ claiming that “we need to provide continuity of liquidity to our users.”

Meanwhile, FTX exchange founder Sam Bankman-Fried (SBF) chose to publicly reveal—after the LUNA/UST crash, naturally—that he knew all along that the token tandem was doomed to fail. This foreknowledge of disaster somehow didn’t deter FTX from listing both tokens, gleefully collecting commissions on trades by customers who would soon be REKT.

SBF has become notorious for saying the quiet part out loud but evidently enjoys keeping FTX customers in the dark until it’s too late. Like Binance, FTX supported the LUNA2 launch, helpfully suggesting that traders “please ensure that you have a full understanding of all the risks associated with investing in digital assets.”

Everybody’s got something to hide, except for me and my Kraken

And then there’s Powell, whose Kraken also listed LUNA2 out of the gate. Queried as to ‘why’ on Twitter, Powell cited “Client demand,” adding that it was easy for people to switch to other exchanges and that “not supporting 1 coin people demand could cost you the entire account.” Powell concluded his self-interested argument with what he presumably intended as an ethical ‘get out of jail free’ card, claiming that “Listing isn’t an endorsement.”

One of Powell’s followers immediately called bullshit, saying “Listing absolutely *is* an endorsement and if your view is it’s ethically acceptable to hock shit because your customers are too fickle for you to exercise any discretion and hope to keep them then you need to target a better customer base or up your retention game.” Powell responded by essentially playing the ‘everything’s a scam’ card in the vain hope that this would end the argument.

But other followers questioned Powell’s ‘moral compass’ for continuing to list tokens associated with ‘proven scammers.’ Powell questioned whether there was “evidence of a scam,” suggesting “incompetence” was more likely the cause of LUNA/UST’s downfall.

Powell further justified Kraken’s pro-LUNA2 stance by saying the exchange aims to be “as asset-agnostic as possible” and “not pick winners and losers.” That will surely come as news to supporters of Bitcoin SV (BSV), which Kraken famously de-listed in 2019—part of a wave of ideological de-listings by exchanges that also included Binance and ShapeShift—and then imposed a 10% haircut on customers who didn’t withdraw their BSV fast enough.

In short, Powell’s assertions of not picking ‘winners and losers’ is worth about as much as Luna Classic tokens. During his Twitter defense of Kraken’s penchant for listing shitcoins, Powell let his mask slip by revealing that “revenue from these other coins pays for all the security, pro-BTC lobbying and marketing.”

The mention of “pro-BTC lobbying” is particularly telling, given the existential threat that the function-free BTC faces from the utility-focused BSV, which aims to be the currency underpinning a sprawling ecosystem of online commerce, not the hot air artificially inflating a speculative get-rich-quick bubble.

As many in the BSV community have long espoused—and each new BSV-based technical achievement makes more evident—just as you don’t need more than one internet, you don’t need more than one blockchain. Consequently, you don’t need the vast majority of blockchain-specific tokens, the frenzied flipping of which is the main revenue source for exchanges like Kraken.

Oh, and when Kraken first listed BSV, it warned its customers that the token was “an extremely risky investment” and there were “many red flags” that meant Kraken “cannot guarantee perfect custody of BSV.” Fast forward to last weekend, and the only serious caveat in Kraken’s LUNA2 announcement was for customers to “do your own research and invest at your own risk.”

One could offer similar advice regarding with which exchanges one chooses to do business, because you’re seriously not getting the whole story listening to these crypto clowns.

Follow CoinGeek’s Crypto Crime Cartel series, which delves into the stream of groups—from BitMEX to Binance, Bitcoin.com, Blockstream, ShapeShift, Coinbase, Ripple,
Ethereum, FTX and Tether—who have co-opted the digital asset revolution and turned the industry into a minefield for naïve (and even experienced) players in the market.