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New York Kraken Ex-Employee Sues Crypto Exchange Over Failure to Pay $900,000

Last Updated March 4, 2021 2:44 PM
Mark Emem
Last Updated March 4, 2021 2:44 PM

Kraken has repeatedly said that it has no operations in New York but a lawsuit by an ex-employee has disputed this putting the bitcoin exchange at risk of facing the wrath of financial regulators in the Big Apple.

According to Bloomberg , Kraken’s ex-trading desk manager, Jonathan Silverman, is suing the cryptocurrency exchange for over $0.9 million. He is consequently seeking compensation for unpaid commissions and stock options.

Kraken hired Silverman two years ago to manage its trading desk. Terms included a $150,000 base salary and a 10 percent commission on annual trading desk profits. After leaving the firm, Kraken allegedly agreed to pay him a lump sum figure of $907,631. The bitcoin exchange did not honor this deal and thus the lawsuit.

Did Kraken Make a Quiet Comeback to New York?

Besides seeking compensation, Silverman also makes the damaging claim that Kraken operates in New York despite claims to the contrary. While that could be dismissed as the expected actions of a jilted ex-employee, the claim is corroborated by another lawsuit filed last year by another Kraken alumnus, Robert Adler.

In Adler’s lawsuit , he claims he was hired to work in the Big Apple starting in September 2017:

Plaintiff [Adler] relocated the New York workspace for Payward’s [Kraken] Trading Desk from Silverman’s apartment to a WeWork office location at 205 East 42nd Street. Payward approved that workspace as a temporary solution with the goal of Plaintiff finding an independent office for the Trading Desk in New York. At the direction of Payward, Plaintiff supervised the build-out of the New York Trading Desk space, and had a role in staffing it.

New York State vs Kraken – Two More Witnesses?

Adler’s claim that he was hired by Kraken to work in New York in 2017 is interesting because the Kraken has previously stated that it quit the state in 2015 over what it deemed an overzealous financial regulatory environment. With New York having announced last year that it was investigating Kraken and other crypto exchanges for potentially violating its virtual currency regulations, it now potentially has two additional witnesses if it has not already roped them in.

At the time, New York’s announcement concerning the investigation did not go down well with Kraken’s founder, Jesse Powell.

Two Lawsuits, Different Demands, Same Details

Adler’s lawsuit also seems to corroborate other allegations that Silverman has made in his lawsuit. This includes the fact that Kraken generated more than $19 million in trading desk profits for the period in question. Though Silverman did not say exactly when, Adler’s lawsuit places the period to the fourth quarter of 2017:

From September 15, 2017 to year-end 2017, the Trading Desk made a Trading Desk Profit (before expenses) of approximately $19,000,000.00 U.S.D. for Payward.