Bitcoin Forum

Runyon started work at Kraken as a financial analyst on 26 March 2018. Kaiser Ng, Kraken’s chief financial officer, was his immediate boss.

Runyon’s first assignment, starting 30 March, was to help with an audit. Ng told Runyon to “come up with anything for the audit list that would satisfy the questions without regard to how accurate the info was” — Ng wanted whatever would “check the box.”

In August 2018, Ng asked if he could use Runyon’s home address as his own — on legal, licensing and banking documents.

Ng claimed concern for his family’s safety, having heard of kidnappings related to crypto exchanges. Runyon wasn’t convinced, so Ng offered to pay Runyon $1,600 a month rent for a room in his apartment, so Ng could use that address on official forms. Runyon says Ng never paid the rent.

Runyon was concerned that several of the countries that Kraken dealt with were on the Office of Foreign Assets Control’s Specially Designated Nationals And Blocked Persons List. That is — they were sanctioned, and it was hugely illegal for Kraken to operate in those countries.

In March 2019, Runyon was asked by Ng to reconcile Kraken customer account balances with the company’s bank balances, in various currencies. Runyon discovered that Kraken’s bank accounts were millions of dollars short, compared to the total customer funds that Kraken should have had on hand.

Runyon called this to Ng’s attention — he was worried that someone had found their way into the system, and was bleeding the funds. Ng immediately removed Runyon from the project.

Around 7 May, Runyon noticed that two employees’ stock options grant vesting schedules were different in the program to what had been set in the 27 November 2017 Board minutes. He assumed it was an error, and corrected it. One of the two employees contacted him to learn how to exercise their options — and Runyon saw the numbers had changed back.

Runyon asked Ng about this. Ng told him the board was amending the terms — and that it wasn’t an issue because … the employee didn’t know about it.

Runyon asked to use some of his paid time off to deal with the stress of long hours at work, having taken none in over a year of employment. Ng approved the leave — then fired Runyon over Zoom chat on his first day of leave, nine days after the second time Runyon had brought the stock options issues to Ng’s attention.

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.

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 (https://twitter.com/jespow/status/986700932778934273?lang=en) and complaints about US regulatory burdens (https://www.coindesk.com/crypto-exchange-kraken-says-us-subpoenas-becoming-barrier-to-entry) definitely put them in Bitfinex's league, not Coinbase's. They used to work with the likes of Crypto Capital too.

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.

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.

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?

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.

What do you guys think? It looks like the whistle blower "exposed" what we knew about exchanges from behind, there are a lot of tricks being pulled to just fit their narratives, specially how Runyon found out that the exchanges are short of millions of dollars.

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?

Anyhow, just beware of Kraken for now, as they could certainly be running a fractional reserve, which is prone to runs.

Anyhow, just beware of Kraken for now, as they could certainly be running a fractional reserve, which is prone to runs.