Kraken Exchange came forward on Twitter to explain its management and policies regarding margin risks for spot trading on its platform, claiming it is safer than any other centralized exchanges.
Recently, FTX’s CEO Sam Bankman-Fried shared in an interview that they had zero control over their margin program, which resulted in customers’ funds going around to the wrong parties and causing huge losses.
The trust in crypto trading platforms seems to be lifting, especially in margin trading. A lot of people are pulling out their funds from centralized exchanges and moving to hard wallets or platforms that ensure ownership over their funds.
In response, Kraken stepped up to clarify its take on margin risks, here are some important points to note:
- There is a limited pool of funds. Once the fund limit runs out, the orders requesting for margin pool are canceled
- No account claims a full pool of funds for an asset to avoid massive liquidation
- Funds are distributed equally to all users
- Margin trading is only supported on around 20% of the over 600 pairs listed on the exchange
- Only limited collateral is offered
- Discounts for collateral asset value collateral are based on liquidity and risks
- In the case of mass liquidations, the liquidity is done with pauses to prevent loss
Jesse Powell, the co-founder, says he believes it’s important to be transparent when approaching customers with finances and policies. He claims Kraken has implemented all the safe trading rules for customers, and the exchange itself.