According to Bloomberg, on Thursday, Jesse Powell, the CEO of San Francisco-based cryptocurrency exchange Kraken confirmed by email that 57 employees (based in North America) had been laid off, but denied that this was due to a security breach, responding to rumors circulating on social media that claim it has suffered a security breach and, as a result, shut down offices in Halifax, Canada.

Powell wrote:

“The cost-saving measure will have zero impact on the quality of our service… Rumors of a security breach are entirely unfounded. No other teams are affected, and we are still aggressively hiring in all areas.”

The rumors seemingly started after a Reddit user claimed, through a throwaway account, the exchange was shutting down its office at the location after laying off “hundreds of people in response to a security breech [sic].”

Per the redditor, there were private security officers “escorting people off the premises” after getting them to sign forms to voluntarily quit their jobs. Another user on the thread going by “MysteriousPlankton” added that Kraken’s employees were asked to voluntarily accept “8 weeks pay as a severance package.”

If they fail to accept by Friday, September 7, the redditor claims they were told they’ll merely be fired. Describing the situation, MysteriousPlankton said:

10 AM, mandatory meeting. Security everywhere, required to hand in door fobs. Sitting in lunchroom, get told that due to volumes being down (both trading and support ticket), and in light of the opening of a new office in Asia, we need to reduce costs, and layoff of recently hired (<3 months, approx 57 people) was not enough.

Per the Reddit user, the staff the cryptocurrency exchange is allegedly laying off impacted its operations on all of its aspects, which would include know-your-customer (KYC) and anti-money laundering (AML) compliance, as well as the processing of deposits and withdrawals.

Initially, Kraken did not issue an official statement on the rumors, but replied to various users on social media claiming nothing along these lines is actually going on as “everything is fine & secure.”

Reddit user “Kraken_Will,” a well-known employee of the exchange on social media, also commented the post claiming it was “false and inaccurate.” Per his words, there was no security breach at the exchange and “hundreds of people have not been laid off.”

He added there’s no commotion going on at the exchange’s offices and that no one is being forced to sign anything as Kraken isn’t shutting down operations anywhere. On Twitter, newly created accounts implying they’re involved in the situation provided little more than an out of context picture of a security guard as proof.

Halifax subreddit moderators were active on the thread, and claimed the throwaway account “definitely riled up someone,” as all of its comments were being reported as spam.

Looking into Kraken’s alleged security breach, CryptoGlobe explored the exchange’s known wallets on the blockchain and couldn’t find any suspiciously large withdrawal. CryptoCompare data shows the exchange had a mini ethereum flash crash on September 4, when its price plunged to about $239 while the cryptocurrency was trading at about $290.


Curiously, ethereum’ s price has since plummeted to about $225 across. all exchanges. The mini flash crash on Kraken could’ve occurred for a number of reasons, including a whale dumping its funds on the market without being cautious. Some users on social media claim the security breach Kraken endured was at its physical location, not on its network.

Earlier this year Business Insider reported Kraken was looking to increase its total manpower by 800 this year. The exchange, as CryptoGlobe covered, recently withdrew from Japan due to low volume.