Kraken: Former Trading Desk manager sues exchange for $1 million alleging flawed New York operations

Kraken, one of the most notable US-based cryptocurrency exchanges has found itself in legal trouble with a former employee. Jonathan Silverman, who served as a manager in the exchange’s New York office has alleged that Kraken had not paid him for his work and that the exchange tabled misinformation about their operations in the state.

Bloomberg reported that Silverman was hired in April 2017 to handle the institutional sales and trading desk for the exchange in the state of New York. It is the exchange’s operations within the state that are called into question, in addition to the failure of commission disbursement to the ex-employee.

Silverman is demanding a compensation of almost $1 million as per his suit filed on April 4, in a New York court. He alleges that in only three months of 2017, the exchange earned over $19 million in profits, from which he did not receive any commission or stock options. As per his hiring agreement with Jesse Powell, the CEO of Kraken, he was to be paid a $150,000 as salary and a 10 percent commission on annual trading desk profit.

In light of this allegation, Christina Vee, a spokeswoman for the exchange, hit back stating that Silverman was “both lying and in breach of his confidentiality agreement”.

The New York operations are of concern to regulators, especially with reference to Powell’s comments on the same. The Kraken CEO admitted that because the exchange has not operated in New York for years, the state’s stringent regulations mean nothing.

Over a year ago, the Kraken CEO lauded the decision to “get the hell out of New York”. In a 2015 post titled “Farewell, New York”, Kraken announced the halting of services in the state, mentioning the infamous BitLicense requirements, which has muddled the operations of many cryptocurrency players over the years.

The post, quite scathingly, read:

“Regrettably, the abominable BitLicense has awakened. It is a creature so foul, so cruel that not even Kraken possesses the courage or strength to face its nasty, big, pointy teeth.”

Silverman’s allegations fly right in the face of Kraken and Powell’s statement regarding the period and the reasons surrounding the New York departure. The ex-employees lawsuit stated:

“[Kraken had been] 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 occurred almost exclusively in New York.”

Post Silverman’s exodus from Kraken, an agreement between the two parties was reached. He alleged that Kraken failed to meet the requirements of this agreement, which would see him receiving $907,631 as a lump-sum settlement. However, the lawsuit indicated that the same had been “refused” by Kraken.

David Silver, an attorney representing Silverman, stated:

“Just because some people in the cryptocurrency space don’t believe the rules apply to them doesn’t mean that’s the way things actually work.”

Kraken’s New York trading office had employed only one other person, in addition to Silverman, but no other lawsuit has emerged alleging that the exchange performed the same discrepancies as mentioned above.

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