Is Kraken Safe? (2025 Update)

What is Kraken?

Kraken is a San Francisco-based exchange. The company has more than 15 million customers across 190+ countries and lists 300+ assets. Kraken is known for its low fees and quality customer service. 

What security features does Kraken have? 

Let’s walk through some of Kraken’s security features: 

• Cold storage and custody controls: Kraken uses advanced cold and hot wallet solutions with 24/7 monitored facilities to help protect customer assets. 
• Account protections: Kraken offers features to protect your account including two-factor authentication with passkeys, withdrawal address whitelisting, and configurable timeouts. 
• Proof of Reserves (PoR):  Kraken runs recurring Proof of Reserves reviews with an independent accounting firm to show that customer assets are backed 1:1 offline. ‍
• Security certifications: Kraken has completed multiple security reviews, and has a ISO/IEC 27001:2013 security certification. ‍
• Bug bounty program and monitoring: Kraken takes steps to ensure that it is staying ahead of threats including real-time monitoring, active testing for vulnerabilities, and a bounty program for researchers. 

Has Kraken ever been hacked?

Kraken states it has had no hacks or breaches that resulted in the loss of customer funds. However, Kraken, like most exchanges, has faced a security issue in the past: 

CertiK incident: In June 2024, security researchers at CertiK exploited an on-chain withdrawal bug and took roughly $3 million from Kraken. After Kraken patched the bug, CertiK at first refused to return the funds, causing Kraken’s Chief Security Officer to refer to the incident as ‘extortion’. Eventually, the cryptocurrency was returned to Kraken.

The money taken in this incident was in Kraken’s treasury. As a result, this hack did not impact customer funds. 

Is Kraken FDIC insured?

Crypto on Kraken is not FDIC insured. Generally, cryptocurrency is not subject to FDIC protection. 

What legal and regulatory issues has Kraken faced?

In the past, Kraken has faced issues from the Securities and Exchange Commission (SEC). However, Kraken is not currently facing legal action. 

• SEC case (2023): The SEC sued Kraken in November 2023, alleging it operated as an unregistered exchange, broker, dealer, and clearing agency. The case was dismissed with prejudice on March 3, 2025, with no penalties. 

Is Kraken legal in the U.S.?

Yes. Kraken is legal and available to U.S. residents. 

Why should I use Kraken?

Kraken is a great choice for investors looking for low fees and industry-leading security. 

What are the risks of using Kraken?

• Custodial risk: Remember, any cryptocurrency held on a centralized exchange can potentially be lost if the exchange is hacked/goes bankrupt. In the past, investors have lost millions after exchanges like FTX and BlockFi went bankrupt. 
• Account-level threats: Scams like phishing and malware can compromise your Kraken account. 

To avoid security issues, it’s recommended to use two-factor authentication and whitelist trusted wallet addresses. In addition, you should move long-term holdings to a hardware wallet which stores your private keys offline. 

Does Kraken report to the IRS?

Kraken requires Know Your Customer (KYC) verification, and like other U.S. exchanges will be required to issue capital gains and losses on Form 1099-DA starting in 2026. 

You are required to report your taxable income from cryptocurrency on Kraken and other platforms to the IRS.