April 14, 2023 at 19:03 GMTModified date: May 15, 2023 at 16:45 GMT
April 14, 2023 at 19:03 GMT

Kraken Forced Into Massive $1.17B Ether Withdrawal

Kraken, one of the world’s leading cryptocurrency exchanges, has initiated a withdrawal of 556,272 Ether (ETH), valued at approximately $1.17 billion.

Kraken, one of the world’s leading cryptocurrency exchanges, has initiated a withdrawal of 556,272 Ether (ETH), valued at approximately $1.17 billion.

The move marks the largest withdrawal since Ethereum’s Shanghai upgrade earlier this week, which enabled validators to withdraw their staked Ether.

According to Nansen, a blockchain data tracker, Kraken accounted for 63.3% of all staked Ether in the withdrawal queue as of 1:30 p.m. Hong Kong time on Friday.

Kraken’s Hand Forced By SEC

In February, the U.S. Securities and Exchange Commission (SEC) fined Kraken $30 million for failing to register its staking programs and forced the exchange to shut down its staking services for U.S. users.

Zhuling Chen, CEO of RockX, a crypto staking service provider, said in an interview that “it’s kind of expected that certain centralized exchanges are initiating withdrawals,” including Kraken.

Largest Staking Withdrawals By Exchanges

The Ethereum blockchain‘s main upgrade feature that completed successfully on Wednesday enables validators to withdraw their staked Ether, which they had deposited to support the network’s operations in return for passive income, typically in the form of more tokens.

The Ethereum Foundation reports that as many as 115,200 withdrawals can be processed daily.

Coinbase, the largest crypto exchange in the U.S., has requested withdrawals of 94,749 Ether, accounting for 10.8% of the total in the queue. Crypto exchange Huobi has requested withdrawals of 45,072 Ether, approximately 5.1% of the total in the queue.

Stats Since The Ethereum Shanghai Upgrade

Since the Shanghai upgrade, 167,460 Ether has been staked and 307,330 Ether has been withdrawn, according to data from Token Unlocks. Over 1 million Ether are currently in the queue for withdrawal.

Around 17.4 million Ether, worth approximately $35.75 billion and representing about 15.38% of the total supply, is staked in the network, according to Etherscan. There were concerns that holders could rush to withdraw and cash in the token. However, CryptoQuant, an on-chain data provider, argued in a February report that it did not expect a flood of Ether sales.

CryptoQuant added that the majority of staked Ether holders were still holding losses compared to Ether prices when it was staked, and selling pressure typically emerges when market participants are sitting on extreme profits.

ETH Price Looking Strong

This outlook appears to be supported by the market, as Ether’s price rose by 10.54% in the past 24 hours, reaching $2,119 and breaking the $2,000 threshold for the first time since August last year.

CryptoQuant also highlighted that the locked Ether cannot be withdrawn simultaneously, estimating that it may take up to a year to withdraw the total value staked in the network.

ALSO READ: Ethereum Upgrade Brings $1.8B Pending Withdrawals