Kraken's Anti-Scam Credentials Questioned Over Memecore Listing

Gate News message, April 20 — Payward, Kraken's parent company, has publicly backed Operation Atlantic, a joint initiative by the UK's National Crime Agency, the U.S. Secret Service, Ontario Provincial Police, and the Ontario Securities Commission to combat approval phishing fraud. However, blockchain analyst ZachXBT has cast doubt on Kraken's due diligence, highlighting the exchange's July 2025 listing of Memecore ($M) despite multiple red flags.

Operation Atlantic, conducted in March 2026, targeted schemes that deceive users into signing harmful smart contracts that drain their wallets. The initiative uncovered over $45 million in criminal assets, seized over $12 million, and identified more than 20,000 potential victims across the UK, USA, and Canada. Payward sent team members to London to collaborate with NCA investigators, notified affected Kraken clients, and responded swiftly to law enforcement data requests. Other exchanges and blockchain analysis firms, including Chainalysis and Tether, also partnered in the effort.

ZachXBT noted that Kraken listed $M on July 3, 2025, despite significant warning signs. Within days of the listing, Kraken transferred $7.9 million to 18 newly created addresses that accumulated 11.7 million $M tokens valued at approximately $39.8 million. On-chain analysis revealed that insiders and related wallets controlled 99.6% of the circulating supply, leaving just 0.0115% available to retail purchasers (approximately $4 million at peak valuations). The token's market cap reached $6 billion, with fully diluted valuations sometimes exceeding $18 billion, yet on-chain liquidity remained severely constrained. Kraken remains one of the few platforms still offering spot trading for $M.

Other major exchanges also participated in Operation Atlantic; however, some did not implement account freezes as part of the enforcement action. The juxtaposition between Kraken's anti-fraud initiatives and its listing decisions has sparked discussion within the crypto community regarding exchange due diligence standards.