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What Is It Like To Work At Kraken? Former Krakenites speak out about cultish culture


Kraken, the crypto exchange, has been overshadowed by the scandals of its competitors, but Kraken is making moves, positioning itself as the most trusted name in crypto during a hellish year in which it put down a woke mutiny, laid off staff, and closed offices in both Japan and Abu Dhabi.

Last week, the Securities and Exchange Commission (SEC) announced that it would be shaking down Kraken for selling unregistered securities. Kraken immediately announced that it had no plans to delist any coins or tokens. A few days later, the SEC reached a settlement number of $30 million and an agreement that Kraken would unwind its staking operations. The staking issue represents an escalation in the SEC’s war on digital assets.

With the implosion of FTX and the arrest of Sam Bankman-Fried, many have lost faith in the promise of cryptocurrency to change the status quo of traditional finance, but many security-conscious investors have stuck with Kraken because of its unblemished record for security.  

Jesse Powell, the co-founder, chairman, and former CEO, founded the company back in the halcyon days of 2011. Since then, it has grown to the 4th largest exchange for digital assets, although less than half the size of Coinbase and 1/30 the size of Binance, its two main competitors.

If you look at the industry norms, Kraken is exceptional. It’s tight-knit, quirky, and more mature than some industry upstarts. No matter what you say about security, Kraken has not been hacked and there’s no argument against that record. Kraken also bears the cultural distinctions of the original creators of crypto.

Kraken is restructuring its services towards traders and institutional investors, as well as its footprint. Any company in the midst of that pivot is gonna feel pain. As such, more compelling is what happened inside Kraken, in terms of the experience of the company and of those who work there.

The Hard Pivot

At Kraken, the layoffs came when late because the company didn’t want to bend to the market. Tenure sometimes trumped the brute calculation of technical ability and even financial results. Employees were judged as redundant, but they weren’t given any warning. In some cases, high performers were laid off and there wasn’t any option to cut hours or go on sabbatical.

The offer to resign was slightly gentler than in many other companies. Take four months’ pay and don’t say a word to anybody. The company ransomed four months’ pay for a signature on a non-disparagement contract. Even so, many former Krakenites still sing the company’s praises and refuse to speak ill of its former CEO — not all of them, but most.  

Last year, Kraken extolled its devotion to “dangerous ideas” such as free speech, reasserting its libertarian cypherpunk ethos, amid waves of staff activism and market turmoil. You had to get with the program or get out. Not so different from what Twitter went through, perhaps because Musk took a page from Kraken’s playbook. If you knew what Powell did at Kraken, you could predict what Musk was going to do at Twitter.

In November, Kraken cut 30% of its staff, and from the outside, it seemed like it was handled well. Inside, not so much.

A former employee told Disruption Banking, “I am still in touch with current employees and the rumor is that those who got redundant were people that their managers did not like or had not built any rapport with. No business criteria at all, no transparency or fair evaluation of employees at risk. If your line manager did not like your face you were out...”

We were forced to sign a contract that said, if we were going to talk to anyone about what happened we were going to lose the 16-week compensation pay. That shows that they handled the layoffs totally the wrong way and they knew about it, and they wanted to cover it by blackmailing us. This is the act of a cult! Not a company!

Another former Krakenite said that they knew multiple staff members in “multiple departments” who were laid off while having issues with their managers or pending harassment claims with HR.

The former Krakenite said, “After the lay-offs, I connected with a lot of people in the company. There were general comments and concerns about why some people were laid off and some others weren’t- especially people who had worked for the company for years meanwhile some who were not laid off were only there for months. Everyone I personally knew who was laid off was on medical leave, filed an HR report, or was looking to transfer departments due to internal issues or was openly seeking other positions. Everyone I know who was NOT laid off were Kraken shills. Eat, sleep, drink Kraken and Kraken ONLY.

Coping with the Crypto Winter

Kraken has announced that on January 31, 2023, it will delist from Japan’s Financial Services Agency, citing “market conditions.” Everybody knows that Japan is unfriendly to foreign companies in general and crypto companies in particular, so it’s no big surprise, especially considering that Japan will levy a 30% tax this next year. Coinbase has made the same choice, after establishing its arm in Japan in 2021.    

On the other hand, it could seem like an odd time to make this move because, in December, Kraken launched major projects with a new Pro dashboard and an NFT marketplace. The latter was ill-timed, to say the least, but users hailed the Pro dashboard, pronouncing it as a superior trading tool. The trading interface “combines spot, margin trading, staking, and portfolio management all in a seamless, modern UI.”

Despite the layoffs and Japanese exit, Kraken rolled out the products to send a message to the faithful that the Mission to accelerate crypto adoption and financial inclusion continues. It was not a bad strategy, and it was focused on the long-term evolution of the industry, making savvy bets and articulating an informed view.

But the crypto winter is not over, as Kraken acknowledged in a blog post in late November last year. “Since the start of this year, macroeconomic and geopolitical factors have weighed on financial markets. This resulted in significantly lower trading volumes and fewer client sign-ups. We responded by slowing hiring efforts and avoiding large marketing commitments. Unfortunately, negative influences on the financial markets have continued and we have exhausted preferable options for bringing costs in line with demand.

Transparency and Proof of Reserves

In the wake of the FTX debacle, pressure has been gathering on exchanges to be more transparent about their reserves. Kraken has touted its own transparency while calling out its competitors for deceptive “Proof of Reserves” (PoR) audits. It was an aggressive strategy to attack Binance on its flank and Binance squealed in response.

In a blog post on December 12, Kraken proclaimed, “we have observed attempts by other platforms and exchanges to pass off diluted and misleading methodologies as a Proof of Reserves audit. Aside from causing marketplace confusion, these incomplete practices being touted as Proof of Reserves audits will erode trust and undermine the shared mission of accelerating financial freedom and inclusion for all.”

Jesse Powell has repeatedly called out other exchanges, especially Binance, for misleading data regarding their PoR, eliciting a fussy, passive-aggressive thread from Binance’s Customer Support Twitter account. 

According to Nic Carter, general partner at Castle Island Ventures, Kraken ranks near the top in the quality of its public PoR, while Binance ranks at the bottom. This is an area where Kraken is demonstrably superior to Binance, which gives Kraken almost indisputable high ground for retail investors and especially among the risk-averse high-volume traders, the goal of the pivot Kraken just made, swinging like Tarzan to catch the next vine.

Targeting Institutional Investors

At the same time, Kraken just brought on Samia Bayou, formerly VP of Global Head of Private Client at crypto lender BlockFi, as Head of Prime Finance and OTC Sales EMEA at Kraken. 

Bayou wrote on LinkedIn, “Kraken is building bridges from the old financial world to the new – crypto prime financing, OTC spot, and derivative markets are poised for growth with institutions entering the ecosystem looking for a reliable and stable partner.”  

Kraken also hired David Olsson as Head of Prime Financing and OTC sales in September, who came via BlockFi from Credit Suisse and Merril Lynch, and the firm also appointed a new board member, Dan Ciporin, a fintech investor, who will serve on the advisory team. 

But to return to PoR issue and its importance for institutional gatekeepers, it’s notable that none of the exchanges actually stipulate that client and operating capital are segregated, one of the main lapses of FTX. Carter refers to this as an “extra credit” line item he’d like to see. Huh? This segregation is a basic requirement for most investment banks and other financial institutions, so it’s unclear why this is an unreachable standard for crypto companies. 

Powell has warned users not to keep their funds on the exchange due to the potential for law enforcement to order the freezing of their funds, which endeared him to many.  

Kraken releases data with fun charts on which law enforcement entities request info from them. 

Powell’s strong opinions on how exchanges provide information to their customers seem to be the driving force behind a lot of Kraken’s public data and blog posts on transparency.

However, the SEC’s main beef with the staking-as-a-service operation was about transparency. Kraken advertised returns of up to 20%, whereas Coinbase, which offers the same service, advertises 6%.

The SEC’s complaint stated, “Investors have had no insight into Defendants’ financial condition and whether Defendants have the means of paying the marketed returns — and indeed, per the Kraken Terms of Service, Defendants retain the right not to pay any investor return.”

Powell steps in it, steps down

Powell is an outspoken libertarian and a true believer in crypto who has marched to the beat of his own drum. As the most public-facing figure of Kraken, the CEO may have begun to outshine the exchange itself. Having a chief executive who spouts conspiracy theories, makes comments on women’s intelligence, and jokes about Asians is inconvenient, especially if one is in the midst of wooing institutional investors and hedge funds, which notoriously shun controversy.

Powell really stepped in it last year when engaging the staff on the company Slack about various political issues such as gender pronouns, racial slurs, and gender differences. Instead of caving, he doubled down and the debates took a bitter turn, which led Powell to issue a company-wide memo for any Krakenite who wanted to take a severance and move on. The memo was a set of Kraken cultural values called the Tentaclements which include being “more Pirate than Professional” yet “kind-hearted.” 

Notably, the Tentaclements stipulated that The Mission of bringing crypto to the masses would involve lobbying “as a single-issue donor, supporting controversial politicians and the legislation that furthers The Mission, possibly to the detriment of other civil rights causes” (emphasis in the original). 

Basically, that is a coy way of saying, “we’ll be giving Republican extremists money because they support crypto even though they try to make it harder to vote for certain people in certain major cities.” The document also whimsically floated the idea of firearms training at company retreats, which is pretty intense during a year when mass shootings occurred every day in the firm’s home country.

All in all, it was a thinly-veiled middle finger to the woke crowd, and though it didn’t sit well with many, less than 1% of the staff was prepared to walk out the door.  With the mutiny silenced, the company shut down the Slack channels where the debates took place and Powell tweeted a snarky description of what had happened, when they “entertained debate for a bit,” explaining, “people get triggered by everything and can’t conform to basic rules of honest debate. Back to dictatorship.”

When asked if a lot of the staff was bitter about the memo, a former staff member told Disruption Banking, “Yes, also tenured ones that could not believe this was happening. Unfortunately, I see now that the same method is being followed by other corporations that do layoffs.”

Observers saw Kraken’s stand against employee activism as an indication of a counter-trend against the corporate activism of recent years. Fears of recession and a tightening labor market may have decreased the bargaining power of workers, and companies can clamp down on controversial social issues.   

The New Leadership

So, Kraken rearranged its executive team and hired new blood with deep connections at major players in PE and finance. In September 2022, two months after Kraken made news with the aggressiveness of its moves, Jesse Powell announced that he would step down from his role and the former COO Dave Ripley would be taking his place. Contrary to appearances, the decision was reportedly planned a year in advance, not because of controversy, but rather boredom, reportedly.  

Powell told Bloomberg, “As the company has gotten bigger, it’s just gotten to be more draining on me, less fun.”

It’s probably just as well. If Powell was into conspiracy theories and weirdly fixated on Anthony Fauci before stepping down, afterward, he went all in. One need only look at the tweets he ‘likes.’ 

It has the flavor of the bizarre vitriol spewed by your boomer uncle at Thanksgiving. And we love our uncles, but maybe they don’t need to be yelling about kids these days while at the helm of a company worth 10 billion USD. And if they are, maybe tone down the angry rhetoric, so you don’t paralyze the company with political debates.

When asked if some of Powell’s statements went too far, a former Krakenite told Disruption Banking, “Powell is the typical millennial Silicon Valley CEO, a cunt. We thought he was different from the rest but unfortunately, he ended up being another one.”    

This may seem to many like a salty take. Another staff member defended the former CEO, saying “Jesse Powell made it an open, supporting network where people had amazing opportunities and a working group like a family.” 

Looking through the Glassdoor

As evidence of how few people have anything negative to say about Kraken, take the announcement that the company was laying off over 1,000 people. In the 90 comments below Powell’s tweet, there is almost no criticism. Most comments noted that the severance package was larger than most others were offering. 

Looking on Glassdoor, the reviews of former Krakenites are rather rosy, possibly because Kraken used the courts to coerce Glassdoor to reveal the names of ten people who anonymously left bad reviews.

Aaron Mackay, an attorney from the Electronic Frontier Foundation (EFF) who defended one of the employees because EFF felt they were being targeted for speaking critically about the company, told Disruption Banking that this type of targeting is unfortunately not uncommon.

But There’s a whole body of law under the First Amendment that is designed to protect people’s rights to express their opinions… anonymously… What was particularly troubling here and what seems to be growing is that when companies do layoffs, they are leveraging severance agreements to include provisions that prevent people from providing any information that might be critical… I think that’s a problem because it does limit the ability of others to actually know what the working conditions are like.”

One courageous former Krakenite went against the grain on Glassdoor, “[Kraken] heavily pressures its staff into leaving positive Glassdoor reviews. Take all the positive reviews with a grain of salt.”

Another Krakenite called the company’s leadership “Stupid, arrogant management. Blind to any weakness of crypto.” A former recruiter also said, “Company leaders often don’t communicate well, if at all. And the recent, large lay-off was handled VERY badly: no notice and even no benefits or assistance for some people.

It’s important for people to have the freedom to speak honestly about corporate policies, without fear of retaliation. At Kraken, where leadership boasts of its devotion to the freedom of speech, that’s unfortunately not possible yet even those laid off defend Kraken’s practices because it’s common for companies to restrict the speech of former staff.

Unless it’s something nice, don’t speak

When Kraken discovered that Disruption Banking was reaching out to former staff, the head of communications went on the offensive, sending an invitation to the assigned reporter on LinkedIn along with a message that the company knew what was going on and wanted to initiate a dialogue.

This did not come off as a friendly invitation, especially not against the background of Kraken’s previously demonstrated litigiousness. Current and former Krakenites immediately stopped communicating as they had been and some deleted connections made with the reporter on LinkedIn.

For this article, Disruption Banking emailed several questions to Kraken’s communications lead about the company’s strategy in the digital asset space, about the layoffs and how they were handled, and specifically about the company’s professed commitment to free speech in view of the non-disparagement issue.

A Kraken spokesperson responded, “As part of our continued evolution, last summer we reinforced our mission and values with employees and candidates. We shared a description of our company culture and introduced a voluntary program for employees who wanted to move on to their next career chapter. Kraken’s unwavering north star and ultimate goal is to accelerate the worldwide adoption of cryptocurrency. Our actions are centered around ensuring that we can execute on our priorities to achieve our goal, and Krakenites (our employees) play a crucial role in our ability to do so. We’re therefore pleased to have over-indexed many commonly recognized employee engagement metrics during a recent internal survey. Over 90% of Krakenites are strategically aligned with our Mission and over 80% see themselves staying with us for over 3 years.

Author: Tim Tolka, writer, journalist, and BI researcher

The editorial team at #DisruptionBanking has taken all precautions to ensure that no persons or organizations have been adversely affected or offered any sort of financial advice in this article. This article is most definitely not financial advice.

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