Kraken’s CSO confirms CertiK returned funds with a ‘small amount’ lost to fees

Share This Post

Kraken and CertiK fought it out on the battleground of Crypto Twitter earlier this week. 

On Wednesday, Kraken said it had received a bug bounty alert from a security researcher to address a bug allowing users to fake their account balance on Kraken. The security team, according to Chief Security Officer Nick Percoco, quickly addressed the issue — quickly, meaning that the team apparently solved it in 47 minutes.

The researcher who flagged the issue shared the bug with two colleagues, and they withdrew roughly $3 million from the Kraken accounts after the first researcher proved the bug by crediting their account with $4.

“After patching the risk, we thoroughly investigated the situation and quickly discovered that 3 accounts had leveraged this flaw within a few days of each other. As we dug deeper, we noticed that one account was KYC’d to an individual who claimed to be a security researcher,” Percoco said.

Percoco’s thread also alleged that CertiK insisted on a meeting between the business development team and Kraken. 

A Kraken spokesperson told Blockworks that they’re “disappointed by this experience and are now working with law enforcement agencies to retrieve the assets from these security researchers.”

(Earlier Thursday, Percoco confirmed the funds were returned, though a “small amount” was lost due to fees.)

CertiK then came out as the security researchers, and now there are a lot of questions. For example, the two can’t seem to agree on the amount. CertiK maintains it never refused to return the funds (Percoco claimed they did, calling it “extortion”) but that the total amount “differs from what Kraken commanded.”

“After initial successful conversions on identifying and fixing the vulnerability, Kraken’s security operation team has THREATENED individual CertiK employees to repay a MISMATCHED amount of crypto in an UNREASONABLE time even WITHOUT providing repayment addresses,” CertiK wrote in a post on X.

The differing narratives caused a stir on X, with various folks weighing in on the series of events. Overwhelmingly, the X crowd seemed to be skeptical of what CertiK was saying, though they did provide a timeline and alleged receipts of the transactions.

Coinbase director Conor Grogan also pointed out that the US-based firm used Tornado Cash for some of the transactions. CertiK didn’t return my request for comment on this.

Start your day with top crypto insights from David Canellis and Katherine Ross. Subscribe to the Empire newsletter.

Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. Subscribe to the On the Margin newsletter.

The Lightspeed newsletter is all things Solana, in your inbox, every day. Subscribe to daily Solana news from Jack Kubinec and Jeff Albus.

Kraken’s CSO confirms CertiK returned funds with a ‘small amount’ lost to fees is written by Katherine Ross for

Related Posts

Tactical RPG Champions Tactics Free NFT Mint Debuts Today

What are Champions NFTs?In Champions Tactics: Grimoria Chronicles,...

FHE and confidential computing will unlock $1T in crypto capital

Confidential computing technologies could unlock the next $1 trillion...

Crypto Hiring: Schwab veteran joins Bitcoin-focused platform

A former executive at Charles Schwab has joined bitcoin...

Genesis Trading-labelled address moves $720M BTC to Coinbase, pointing to the start of asset liquidations

A cryptocurrency wallet related to Genesis Trading has transferred...

Istanbul Blockchain Week Partners with Fortune Magazine Türkiye

What is Istanbul Blockchain Week?Istanbul Blockchain Week is an...

Helium eyes energy sector with ‘virtual power plant’ network

Last week, the Helium Foundation said in a somewhat-cryptic...
Ethereum (ETH) $ 3,418.94
Bitcoin (BTC) $ 64,629.32
Tether (USDT) $ 0.99987
XRP (XRP) $ 0.611325
BUSD (BUSD) $ 0.981472
Cardano (ADA) $ 0.439049
Dogecoin (DOGE) $ 0.122702
Litecoin (LTC) $ 71.95
Solana (SOL) $ 157.81