A former employee at United States-based crypto exchange Kraken is suing the firm for over $900,000, claiming the exchange failed to pay him for his work there. Bloomberg reported the news on April 7.
Jonathan Silverman — who reportedly joined the exchange in April 2017 to manage institutional sales and its trading desk in New York — claims he reached an oral agreement with exchange founder Jesse Powell to receive a $150,000 salary, as well as 10% commission of the trading desk’s annual profit.
In his lawsuit filed in New York on April 4, Silverman reportedly claims the trading desk took in over $19 million in profits during three months in 2017, but that he received neither the commission nor the reportedly promised additional stock options.
Bloomberg notes that a Kraken spokesperson, Christina Vee, said that Silverman is “both lying and in breach of his confidentiality agreement.”
Silverman’s figure roughly aligns with similar failure-to-pay claims made in a separate lawsuit from one-time Kraken employee Robert Adler, who has alleged the New York trading desk made $19 million in profit between September 15, 2017 and the end of that year.
After leaving the firm, Silverman claims he reached an agreement with Kraken that would pay him $907,631 as a lump sum settlement. The platform has nonetheless refused to make the payment, his lawsuit alleges.
The Silverman lawsuit runs deeper than an alleged breach of personal agreements, for it reportedly accuses Kraken of the following:
“Misrepresenting to the public and government regulators that it was not operating in New York; when in reality, Kraken’s OTC practice, and OTC trading (including logging into the Kraken exchange and negotiating wire transfers) occurred almost exclusively in New York.”
Bloomberg reports that Silverman was one of at least two allegedly employed at Kraken’s New York trading office.
Bloomberg further cites a 2018 New York Attorney General report on crypto exchanges that included Kraken as one of the platforms alleged to be operating internal trading desks that buy and sell on their own market — alongside Bitfinex, bitFlyer and Poloniex.
Richard Johnson, an analyst at Greenwich Associates, called the alleged practice a “dirty little secret of the crypto exchange world,” according to Bloomberg.
As previously reported, Kraken ceased offering services to NY residents in 2015, calling the state’s crypto regulatory regime under the stringent BitLicense “a creature so foul, so cruel that not even Kraken possesses the courage or strength to face its nasty, big, pointy teeth.”
In fall 2018, the controversy over Kraken’s alleged NY operations resurfaced, when the California- headquartered exchange chose not to respond to a voluntary information request from New York’s Attorney General, and reiterated that it does not operate illegally in New York.