The cryptocurrency gift can be withdrawn immediately — and is designed to help those who may have been displaced following Russia's invasion.
Kraken has announced that it is giving $1,000 in Bitcoin to Ukrainian users who opened an account on the crypto exchange before March 9.
The cryptocurrency can be withdrawn immediately — and is designed to help those who may have been displaced following Russia's invasion.
Additionally, a further $1,000 worth of Kraken Fee Credits are being offered to ensure recipients can make currency conversions at no cost.
To be eligible, users must have gone through Know Your Customer checks to be at an Intermediate or Pro level of verification.
However, further crypto is going to be distributed throughout the second quarter of 2022 so eligible users have time to get verified.
Overall, Kraken says that more than $10 million will be directly donated to affected Ukrainians.
The exchange will be hoping to view this as a reasonable compromise, as the trading platform has rejected calls to block its users in Russia. Kraken's CEO, Jesse Powell, said:
"We hope to continue being able to provide critical financial services in a time of need to both our clients in Ukraine and in Russia. Cryptocurrency remains an important humanitarian tool, especially at a time when many around the world can no longer rely on traditional banks and custodians."
Kraken says that donations delivered through this aid package will be equivalent to the total trading fees that were paid by clients based in Russia over the first half of 2022 — effectively meaning that the company is not profiting from their custom.
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A Compromise?
Kraken is effectively trying to maneuver itself out of a tough situation. While crypto exchanges have faced calls to block all Russians — following in the footsteps of other companies who have condemned the Ukraine invasion — many of these businesses have been reluctant to do so. They argue that many consumers there are opposed to what is happening, and are feeling the effects of unprecedented currency devaluation. The company added:
"We believe this aid program benefits both our company and our clients, ensuring none are disenfranchised by the actions of their representatives and leaders."
The amount of Bitcoin that will be distributed in Tranche 1 on Thursday roughly equates to the total fees that Ukrainian Kraken users have paid over the past nine years.
Meanwhile, the BTC issued in subsequent tranches — such as the next one on April 1 — will be equal to the fees collected from Russia-based Kraken accounts in the first quarter of this year. As the company explained:
"For example, if Kraken clients in Russia pay $5 million in fees in Q1 and there are 10,000 qualifying accounts in Tranche 2, each account will receive $500 USD worth of BTC."
Kraken's CEO, Jesse Powell, put it this way: the more its clients in Russia trade, the more that fellow users in Ukraine will receive.
Using crypto exchanges in Russia has gotten harder in recent days after Visa, Mastercard and PayPal announced they were suspending operations in the country, making it difficult for consumers to top up accounts with fiat.
CoinZoom recently became the first crypto exchange to break rank by stopping new customers from opening accounts in Russia, but the Utah-based platform will not block existing users.
All major trading platforms have confirmed that they are freezing accounts that belong to sanctioned individuals and entities — with Coinbase confirming that 25,000 Russian accounts linked to illicit activity have been targeted to date.
Exchanges argue that it isn't their business to ban an entire country from using their services, and they will only take such drastic measures if the U.S. orders them to do so.
