Kraken invites investors, accidentally invites hard questions

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Even with the crypto market returning to a bullish state, it appears Kraken is hurting for money. The cryptocurrency exchange recently teamed up with Bnk to the Future, and has emailed customers asking them if they want to invest in the company, with a $4 billion evaluation of their worth. The move has several experts asking some serious questions about the exchanges current state and motives.

If you haven’t seen the email invite to invest, it goes a little something like this:

“On May 20th, Bnk to the Future will offer preferred shares of Kraken stock to registered users on their platform. Preferred shares of Kraken stock can be purchased until June 20th, with a minimum investment of only $1,000.”

On his popular Telegram channel @ZeroNoncense, twitter user CryptoMedication (@ProofofResearch) started to break down the many problems and concerns this raises, chiefly that this is an illegal public offering.

Without registering with the Securities and Exchange Commission (SEC), no EDGAR filing, no prospectus, and no publically available financial information. With all of those things making this offering illegal, and unwise to invest in, Kraken is also inviting unaccredited investors to buy shares, also illegal.

Looking at the Bnk to the Future doesn’t add much confidence either. The only known team member listed is Jesse Powell, CEO of the company, with two other members going by Brandon and Maciek. As @ProofOfResearch asked:

“Far as I know, its just Jesse at Kraken. Two other “team members” listed here have no photos or last names. Wtf?

“This screams “$4 billion USD!” to you guys?”

More is guaranteed to come out as well. On twitter, noted crypto journalist Amy Castor started asking questions about their funding history. Considering Castor always uncovers the unflattering side of crypto exchanges, like QuadrigaCX, Bitfinex and Binance, Kraken should start getting nervous.

Some have started to speculate that Kraken’s cozy relationship with Binance, Bitfinex and Tether could now have the exchange hurting for funds. If they can’t play the same games with stablecoins that they have in the past, and there isn’t enough money in their accounts to cover real trades that are happening now, they’ll need new sources of cash (like this fundraising) to keep them afloat. That may be what Kraken is doing now.

Another twitter user speculated that, as altcoins might not be performing as strongly as Bitcoin Core (BTC), Kraken might be struggling to keep up with demand of the suddenly surging market.

With so many people looking hard at Kraken now, their move to invite investors looks like it has done more to invite scrutiny and uncomfortable questions. As the days go on, we’ll see how deep the rabbit hole goes.