Recently, the Sajie team was surprised to find that Kraken, a long-established crypto asset exchange in the United States, is actively providing crypto asset services to residents in mainland my country. Partners can not only log in to its official website without using a VPN, but also use Chinese mobile phone numbers, ID cards/passport information for KYC (even the country of residence can be selected as China...). After residents of mainland my country complete registration and reach the immediate level, the daily withdrawal amount that a single person can operate for a single account is up to 100,000 US dollars.
After the Sajie team invited many friends to test USDT, they found that it is indeed possible to withdraw funds conveniently through Kraken, and there is no problem with funds entering either Hong Kong or US accounts.
Today, I will talk to you about whether Kraken will become the savior of “frozen friends” in the future? And, if you use Kraken for deposits and withdrawals for a long time, will there be any risks?
01. Kraken tested, can withdrawals be completed with a mainland IP and ID card?
After discovering that the Kraken exchange was suspected of operating to residents in mainland my country, the Sajie team invited several friends to conduct withdrawal evaluations on Kraken in mainland China. As of the time of this article, the Kraken official website (http://kraken.com) still allows unrestricted access from mainland my country IP addresses.
After entering the website, one can use the real ID card of residents in mainland my country for KYC without any obstacles. What shocked the Sajie team even more was that the Kraken exchange actually allowed the language to be switched to "Chinese" on the official interface, which is extremely convenient for residents in mainland my country.
Taking USDT as an example, after completing the registration, users can select Deposit in Transfer, and after recharging their U into the USDT recharge address generated by Kraken, it is more convenient to choose USD to withdraw.
After the exchange is completed, according to the evaluation of partners, the crypto-friendly banks commonly used by currency circle partners are such as Hong Kong Zhongan, iFastx and other banks. After the funds are exchanged into the bank account, if there is a need to put the funds into mainland my country, you can use Wise to exchange the funds (if the amount is not very large) into RMB and deposit them into a domestic account or a certain treasure.
However, it should be noted that Wise itself is not a crypto-friendly financial services provider, so it generally does not accept direct payments from Kraken. In actual testing, many partners use Hong Kong accounts or iFastx to receive payments and then transfer them to Wise.
Sajie’s team believes that Kraken’s increasingly bold operations may be related to betting on Trump’s success in taking office and that people with close ties to him will join Trump’s government to hold important positions.
According to a report by the New York Post on February 7, Marco Santori, former general counsel of Kraken and a well-known American crypto lawyer, has been included in the list of potential members of the Trump administration's digital asset market working group. Although it is only a nomination at present, and lawyer Santori no longer holds a position at Kraken Exchange, we do find that Kraken, a veteran exchange founded in 2011, seems to be enjoying a second spring - Kraken's logo has appeared in several important and politically important rallies in the United States.
02. Is Kraken’s behavior compliant? Are there any risks in using Kraken for a long time?
Is Kraken’s behavior legal?
Sajie’s team can give a clear answer: Kraken’s business operations targeting residents in mainland China are illegal financial activities under Chinese law and have crossed the criminal red line.
According to the second paragraph of Article 1 of the "Notice on Further Preventing and Dealing with the Risks of Virtual Currency Trading Speculation" (referred to as the "9.24 Notice") issued by the People's Bank of China and ten other departments in 2021, "Virtual currency-related business activities are illegal financial activities." Specifically, my country's regulatory authorities believe that the following currency-related behaviors are all illegal financial activities: conducting legal currency and virtual currency exchange business, virtual currency exchange business, buying and selling virtual currency as a central counterparty, providing information intermediary and pricing services for virtual currency transactions...
The third paragraph of Article 1 of the 9.24 Notice further clarifies that overseas virtual currency exchanges providing services to residents in my country through the Internet are also illegal financial activities.
Therefore, Kraken's behavior of providing official Chinese services, recognizing customers' choice of mainland China as their location option, and agreeing to mainland China ID cards/passports to pass KYC is basically a pretense, and it is very certain that it conducts crypto asset financial business for residents of mainland China.
After the release of the 9.24 Notice, common charges in practice for entities conducting crypto asset trading business in my country include illegal business operations (illegal currency exchange, illegal provision of payment and settlement services), illegal use of information networks, etc. If the exchange is used by others as a tool for money laundering or concealing criminal proceeds, it may also become an accomplice to other crimes, and the criminal risk is extremely high.
Are there risks in using Kraken long term?
Are there any risks for partners to use Kraken for a long time? Can “frozen friends” use Kraken as a safe channel for withdrawing funds in the future? I believe these issues are of concern to partners.
First of all, we need to reiterate the old tune: the 9.24 Notice only prohibits the provision of crypto-asset financial services or other business services within my country or to Chinese residents, but does not prohibit Chinese residents from holding or engaging in some occasional, small-scale crypto-asset trading activities among the private sector. Therefore, even if partners use Kraken to conduct some normal deposit and withdrawal activities, it does not constitute a violation of the law or a crime, so you can rest assured.
As for whether this channel can be used for a long time, the Sajie team believes that, as mentioned above, Kraken's business in my country is itself an illegal financial activity, which may be involved in multiple crimes and is likely to be subject to regulatory intervention in the near future. Therefore, "frozen friends" can use it as a withdrawal channel in the near future, but Sajie is not optimistic about its long-term use.
But then again, as a crypto asset exchange regulated overseas, Kraken’s channel funds have generally good compliance, and there have been no cases of accounts/U-coins being frozen due to the use of the exchange. After funds exchanged through Kraken are transferred to China through overseas crypto-friendly banks, the possibility of being frozen by public security agencies is also low.
03. Final words
The Sajie team reminds all new and old friends not to follow Kraken's example and wantonly carry out financial business related to crypto assets in my country. At present, Kraken is still in the stage of secretly developing its business by taking advantage of the regulatory window period, and it is only a matter of time before it is discovered.
At the same time, we should also see that Kraken has certain special features. Since its former executives are likely to obtain key positions in the future Trump administration, coupled with its financial contributions to Trump's campaign, Kraken has the potential to become one of the future American "red-top" exchanges.
Therefore, new and old friends should not imitate this practice. Its path cannot be copied and do not cross the criminal red line.
