Bitcoin exchange Kraken raises millions of dollars

Aiming to become the new hot virtual-currency exchange, Kraken lands $5 million in a Series A round of funding from Hummingbird Ventures.

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Kraken's digital currency exchange. Kraken

It appears the Kraken Bitcoin exchange is aiming to become the new Mt. Gox. And, in its endeavors, it's managed to raise a $5 million Series A round of funding.

Though Kraken wants to be as big and popular as Mt. Gox once was, it's worked to distance itself from the failed exchange. The company touts itself as the "new standard for secure, feature-rich Bitcoin trading" and says it has passed audits that Mt. Gox failed.

"We're excited to get significant funding to expand Kraken, which already has the most advanced order types, from the newest of users to the most sophisticated traders," founder and CEO of Kraken Jesse Powells said in a statement. "We're looking forward to forging strong bank relationships in the US and elsewhere in the world, as we have in the EU, and expanding our global footprint."

The exchange's round of funding was led by Europe-based Hummingbird Ventures. Kraken is owned by Payward, which created the exchange platform for trading Bitcoin, Ripple, Litecoin, Namecoin, Dogecoin, Ven, and other digital currencies. On the Kraken platform, users can partake in margin trading, advanced ordering, deposits, and withdrawals.

On Monday, Kraken announced that it conducted a successful audit of its holdings, which showed it has 100 percent of all bitcoins in its reserve. It was this kind of audit that Kraken says Tokyo-based Mt. Gox couldn't pass prior to its implosion.

Mt. Gox went offline last month and then filed for bankruptcy after it was revealed that hackers stole nearly $500 million in bitcoins through a weakness in the company's system. Bitcoin bank Flexcoin also announced earlier this month that it was shutting down after being hacked.

Since the fall of Mt. Gox, US, European, and Japanese government regulators have questioned the legitimacy of digital currencies. Earlier this month, the Japanese government ruled that "Bitcoin isn't a currency," and last month US Senator Joe Manchin called for an outright ban of Bitcoin. The main issue for governments is that virtual currencies are difficult to regulate.

Kraken, however, says it already follows regulations. The exchange is one of only a few that operate out of the US. The company says the US is the largest Bitcoin market, but most of the virtual currency's liquidity is held in other countries. Kraken said it's looking to change that.

About the author

Dara Kerr is a staff writer for CNET focused on the sharing economy and tech culture. She grew up in Colorado where she developed an affinity for collecting fool's gold and spirit animals.

 

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