A former employee at Kraken is suing the cryptocurrency trading platform for failing to properly pay him for his services. The compensation he is demanding totals over $900,000 plus stock options which he was promised.
Jonathan Silverman was hired in April 2017 to manage Kraken’s institutional trading. He managed the trading desk in New York but is now claiming that he was never properly compensated for his time working for the cryptocurrency exchange.
Commissions and Options
According to a report from Bloomberg, Silverman is alleging that Jesse Powell, the exchange’s founder, offered him an annual salary of $150,000 on top of a 10 percent commission on the trading desk’s yearly profit. The 10 percent commission, he said, was agreed upon in person by word of mouth.
Although the trading desk generated $19M in profit during his stint at the company from September 2017 to early 2018, he never received his commission nor the stock options which were also promised to him.
A spokeswoman for Kraken, however, has said that Silverman is outright lying.
Kraken’s Mounting Legal Issues
Powell is known for brushes with the law in the past.
For example, last year he got into a dispute with the New York Attorney General who requested more information for investigative purposes. He declined to provide this information due to ‘most crypto traders’ not being concerned with protections from market manipulation. Kraken, he said, does not have to adhere to NY rules because the firm does not operate there.
This comment now may come back to haunt Kraken given Silverman’s lawsuit.
Silverman is asserting that Kraken not operating in New York is far from the truth. He accounts that Kraken’s own trading desk and overall OTC trading practices, all occur almost exclusively in New York. Silverman was one of the last individuals employed at Kraken’s New York trading office. This could pose a serious problem for the cryptocurrency exchange.
Most cryptocurrency exchanges, however, don’t even have formal locations for their trading desks. Bitfinex, bitFlyer, and Poloniex all reportedly have ‘internal trading desks’ that buy and sell in their own markets. This has been a longstanding ‘dirty little secret’ of cryptocurrency trading.
If Kraken is held responsible for Silverman’s accusations, then they may have even more trouble on their hands. The case would also be a definitive opinion on whether or not Kraken currently operates or operated within New York in any capacity and if they should be held responsible for the regulations in the state.
Will Silverman prove himself vindicated? What are your opinions on the case? Let us know your thoughts below.