Is Kraken Safe And Legit? Full Security Review

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Yes, Kraken is considered both safe and legit. It has a strong security record, having never been hacked since its founding in 2011. Kraken employs advanced security measures, including cold storage for 95% of user funds, two-factor authentication (2FA), and encryption. It is regulated by FinCEN in the U.S., FINTRAC in Canada, and operates Kraken Bank under the oversight of the Wyoming Department of Banking.

Founded in 2011 by Jesse Powell, Kraken is one of the oldest and most respected cryptocurrency exchanges globally. It is accessible to users in over 190 countries and 48 U.S. states. Kraken supports nearly 300 cryptocurrencies and offers a comprehensive range of trading services, from basic crypto trades to advanced features like margin and futures trading.

In this article, we’ll explore whether Kraken is a safe and legitimate choice for crypto traders by examining its security measures, regulatory standing, and customer feedback.

Is Kraken safe and legit

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What makes Kraken legit?

Kraken adheres to strict regulations in all jurisdictions where it operates. It is registered as a Money Services Business (MSB) with:

FinCEN (USA)
FINTRAC (Canada)

Additionally, Kraken launched Kraken Bank, which is regulated by the Wyoming Department of Banking, adding another layer of regulatory oversight and enhancing its legitimacy as a financial institution.

Following regulatory action by the SEC, Kraken has discontinued staking services for U.S. customers, demonstrating its compliance with evolving legal frameworks.

What makes Kraken safe?

Kraken is regarded as one of the safest cryptocurrency exchanges. Over the past decade, Kraken has never been hacked, which speaks volumes about its robust security infrastructure. Here are some key features that contribute to its security:

Cold storage. Kraken stores 95% of its assets in offline, air-gapped cold storage located in geographically distributed locations. This minimizes the risks of cyber-attacks and thefts.
Two-factor authentication (2FA). Users are required to set up 2FA using Google Authenticator or Yubikey for an added layer of security.
Encryption. Kraken ensures that sensitive data, including trading information and personal details, is encrypted both at rest and in transit.
Real-time monitoring. The platform monitors all accounts in real-time for suspicious activity, ensuring swift action in case of any irregularities.
Penetration testing. Kraken employs a team of experts who perform regular penetration tests to identify and fix vulnerabilities.
Bug bounty program. Kraken invites security researchers to find weaknesses in its platform by offering rewards for successful vulnerability disclosures.
Global settings Lock (GSL). Prevents unauthorized changes to account settings, ensuring higher security.

Can I use Kraken in my country?

Kraken is available to users in over 190 countries and 48 U.S. states, but its availability depends on local regulations. Traders from certain regions, such as New York, Washington State, and specific U.S. territories, are restricted from using the platform due to regulatory limitations. Similarly, some countries may have restrictions on credit or debit card transactions.

To verify if Kraken is available in your country, you can visit the Kraken support page, which provides a full list of supported regions and restricted areas. Additionally, Kraken’s terms of service and FAQ section offer more detailed information on country-specific restrictions and requirements for account verification.

Kraken’s background

Founded in 2011 by Jesse Powell, Kraken officially began trading in 2013 and quickly became one of the most trusted cryptocurrency exchanges. By 2014, Kraken was chosen to provide bitcoin price data to Bloomberg and played a key role in the investigation of the Mt. Gox collapse. The platform supports nearly 300 cryptocurrencies and operates in over 190 countries. In 2020, Kraken became the first U.S. crypto exchange to receive a bank charter, establishing Kraken Bank, regulated by the Wyoming Department of Banking.

Kraken’s rare security compromise

While Kraken hasn’t technically been hacked as of yet (as in no user funds have been compromised), in June 2024, a group of individuals claiming to be security researchers discovered a critical bug in Kraken's system. This vulnerability allowed them to artificially inflate their account balances by initiating deposits without completing them. They exploited this flaw and withdrew approximately $3 million from Kraken's treasury. Kraken fixed the issue promptly, and no client funds were affected.

However, instead of following the standard protocol for bug bounty programs, the individuals refused to return the funds and demanded an unspecified payment from Kraken. This led the company to classify the event as extortion rather than ethical hacking. Kraken has since been working with law enforcement to retrieve the stolen funds.

Considerations for traders

Kraken is a secure and advanced trading platform, but its suitability can vary depending on the trader's experience level. Here are key considerations for both beginners and experienced traders:

Learning curve. Kraken's interface might seem complex initially, but beginners can start with basic trading features like spot trading. Advanced tools such as margin trading and futures can be explored later.
Educational resources. Kraken offers a variety of guides and tutorials to help new traders understand the platform and basic cryptocurrency concepts. These resources are invaluable for gaining confidence.
Fees awareness. Beginners should be mindful of Kraken’s fee structure. While competitive, fees for credit card transactions or using the instant buy feature can be higher. It's recommended to use bank transfers to reduce costs.
Security features. Kraken’s two-factor authentication (2FA), cold storage, and Global Settings Lock (GSL) provide strong security, but new traders need to take time to understand and implement these protections.
Advanced trading features. Kraken offers margin trading, futures contracts, and OTC (Over-The-Counter) trading for high-volume traders. These features are ideal for those seeking more complex strategies.
API access. Traders with technical expertise can take advantage of Kraken’s API access, allowing them to integrate with bots and algorithms for automated trading strategies.

Kraken’s pros & cons

Strong security measures with no history of hacks
Wide selection of over 200 cryptocurrencies
Advanced trading tools (margin, futures, stop-loss, and automated strategies)
24/7 live chat support

Not available in certain U.S. states (e.g., New York, Washington)
High fees for some transactions, particularly credit card payments
The platform can be overwhelming for beginners

Risks and warnings

While Kraken is a reputable and secure platform, trading cryptocurrencies carries significant risks. The following warnings should be considered before engaging in trading:

Market volatility. Cryptocurrency markets are highly volatile. Prices can swing dramatically in short periods, potentially leading to substantial financial losses, especially for leveraged positions. Traders should always be prepared for unexpected market movements.
Leverage risks. Kraken offers advanced tools like margin and futures trading. While these can increase potential profits, they also magnify losses. Using leverage without proper understanding of risk management can result in the loss of your entire position.
Regulatory changes. Cryptocurrency regulations are evolving. Changes in laws or regulations in your country can impact your ability to trade or hold certain assets. Always stay informed about the regulatory landscape in your region.
No insurance for crypto assets. Unlike traditional financial institutions, cryptocurrency exchanges, including Kraken, do not offer insurance on crypto assets in case of a breach or loss. This makes it crucial to employ strict personal security measures and avoid keeping large sums on the platform.
Technical risks. Kraken’s platform can sometimes experience downtime, particularly during periods of high market activity. This may prevent you from executing trades at critical moments, which could lead to missed opportunities or losses.

Use two-factor authentication (2FA), ideally with Google Authenticator

As an experienced trader, my advice is to approach Kraken — and any cryptocurrency exchange — with a disciplined mindset. First and foremost, security must be your highest priority. Kraken offers strong security measures, but as the user, you are responsible for implementing these safeguards. Always use two-factor authentication (2FA), ideally with Google Authenticator or a hardware key like Yubikey. This ensures that even if someone accesses your login credentials, they cannot gain access to your account without the second layer of security. Furthermore, avoid storing large sums of cryptocurrency on any exchange. While Kraken has never been hacked, no exchange is impervious to risk. Use a hardware wallet for long-term storage.

Understanding the tools at your disposal is also important. Kraken provides advanced trading options such as margin trading and futures, which can amplify both profits and losses. These features are not for beginners. Ensure you have a solid grasp of basic trading before venturing into these areas. Misuse of leverage can wipe out your account faster than you realize. Study the platform's fee structure, market trends, and order types to ensure you're trading efficiently.

Summary

In conclusion, Kraken is safe and legitimate. It offers a high level of security and is regulated in key jurisdictions, making it a trusted choice for both novice and experienced traders. While it is a secure platform, it is always recommended to use additional measures, such as storing crypto in personal wallets, to further safeguard your assets.

For experienced traders looking for advanced trading tools and a secure environment, Kraken is one of the top choices in the cryptocurrency market.

FAQs

Is Kraken trustworthy?

Yes, Kraken is widely trusted due to its long history, strong security protocols, and compliance with regulations.

Does Kraken support credit or debit card deposits?

Yes, Kraken does support credit and debit card deposits, but this service is not available in all countries. Check Kraken’s FAQ for the list of supported countries.

How do I lower my trading fees on Kraken?

Kraken offers reduced trading fees for high-volume traders. You can lower fees by using Kraken Pro, which operates on a maker/taker fee schedule based on your 30-day trading volume.

What happens if I lose access to my two-factor authentication (2FA)?

If you lose access to your 2FA device, you can recover your account using backup codes provided during the setup. If these are lost, you’ll need to contact Kraken support for identity verification and recovery assistance.

Team that worked on the article

Igor is an experienced finance professional with expertise across various domains, including banking, financial analysis, trading, marketing, and business development. Over the course of his career spanning more than 18 years, he has acquired a diverse skill set that encompasses a wide range of responsibilities. As an author at Traders Union, he leverages his extensive knowledge and experience to create valuable content for the trading community.

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Chinmay Soni is a financial analyst with more than 5 years of experience in working with stocks, Forex, derivatives, and other assets. As a founder of a boutique research firm and an active researcher, he covers various industries and fields, providing insights backed by statistical data. He is also an educator in the field of finance and technology.

As an author for Traders Union, he contributes his deep analytical insights on various topics, taking into account various aspects.

Mirjan Hipolito is a journalist and news editor at Traders Union. She is an expert crypto writer with five years of experience in the financial markets. Her specialties are daily market news, price predictions, and Initial Coin Offerings (ICO).

Cryptocurrency

Cryptocurrency is a type of digital or virtual currency that relies on cryptography for security. Unlike traditional currencies issued by governments (fiat currencies), cryptocurrencies operate on decentralized networks, typically based on blockchain technology.

Leverage

Forex leverage is a tool enabling traders to control larger positions with a relatively small amount of capital, amplifying potential profits and losses based on the chosen leverage ratio.

Risk Management

Risk management is a risk management model that involves controlling potential losses while maximizing profits. The main risk management tools are stop loss, take profit, calculation of position volume taking into account leverage and pip value.

Bitcoin

Bitcoin is a decentralized digital cryptocurrency that was created in 2009 by an anonymous individual or group using the pseudonym Satoshi Nakamoto. It operates on a technology called blockchain, which is a distributed ledger that records all transactions across a network of computers.

Futures contract

A futures contract is a standardized financial agreement between two parties to buy or sell an underlying asset, such as a commodity, currency, or financial instrument, at a predetermined price on a specified future date. Futures contracts are commonly used in financial markets to hedge against price fluctuations, speculate on future price movements, or gain exposure to various assets.

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