Kraken’s CSO confirms CertiK returned funds with a ‘small amount’ lost to fees

Kraken and CertiK brought their beef to social media after Kraken said researchers exploited $3 million through a bug

article-image

Kraken and Adobe stock modified by Blockworks

share

Kraken and CertiK fought it out on the battleground of Crypto Twitter earlier this week. 

On Wednesday, Kraken said it had received a bug bounty alert from a security researcher to address a bug allowing users to fake their account balance on Kraken. The security team, according to Chief Security Officer Nick Percoco, quickly addressed the issue — quickly, meaning that the team apparently solved it in 47 minutes.

The researcher who flagged the issue shared the bug with two colleagues, and they withdrew roughly $3 million from the Kraken accounts after the first researcher proved the bug by crediting their account with $4.

“After patching the risk, we thoroughly investigated the situation and quickly discovered that 3 accounts had leveraged this flaw within a few days of each other. As we dug deeper, we noticed that one account was KYC’d to an individual who claimed to be a security researcher,” Percoco said.

Loading Tweet..

Percoco’s thread also alleged that CertiK insisted on a meeting between the business development team and Kraken. 

A Kraken spokesperson told Blockworks that they’re “disappointed by this experience and are now working with law enforcement agencies to retrieve the assets from these security researchers.”

(Earlier Thursday, Percoco confirmed the funds were returned, though a “small amount” was lost due to fees.)

CertiK then came out as the security researchers, and now there are a lot of questions. For example, the two can’t seem to agree on the amount. CertiK maintains it never refused to return the funds (Percoco claimed they did, calling it “extortion”) but that the total amount “differs from what Kraken commanded.”

“After initial successful conversions on identifying and fixing the vulnerability, Kraken’s security operation team has THREATENED individual CertiK employees to repay a MISMATCHED amount of crypto in an UNREASONABLE time even WITHOUT providing repayment addresses,” CertiK wrote in a post on X.

Loading Tweet..

The differing narratives caused a stir on X, with various folks weighing in on the series of events. Overwhelmingly, the X crowd seemed to be skeptical of what CertiK was saying, though they did provide a timeline and alleged receipts of the transactions.

Loading Tweet..

Coinbase director Conor Grogan also pointed out that the US-based firm used Tornado Cash for some of the transactions. CertiK didn’t return my request for comment on this.


Get the news in your inbox. Explore Blockworks newsletters:

Tags

Decoding crypto and the markets. Daily, with Byron Gilliam.

Upcoming Events

Old Billingsgate

Mon - Wed, October 13 - 15, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

recent research

Unlocked by Template (10).png

Research

Innovations on Aptos’ technical design through Raptr, Shardines, and Zaptos approach near-optimal latency and throughput by unlocking 100% utilization of network resources, with the capacity to settle 260k transactions per second with latencies less than 800ms. The original Move language was revamped with the launch of Move 2, supporting more expressivity in smart contract logic and a scalable ability to interact with high volume datasets. The ecosystem has benefitted from strong asset inflows, now hosting over $1.3B in stablecoins, $450M in bridged BTC, and $530M in RWAs. Activity in the Aptos ecosystem has grown notably over the past year, with monthly application revenue reaching ~$835k and monthly DEX volumes growing to over $5B, both at new all time highs.

article-image

Interchain Labs will focus on sovereign L1s and institutional demand, abandoning plans for smart contracts on the Cosmos Hub

article-image

Also, only three tokens have outperformed bitcoin so far this year: XMR, HYPE and SKY

article-image

The fund group has submitted proposals in recent months for other funds that would hold litecoin, solana, XRP, HBAR, Sui and others

article-image

Momentum’s back — BTC leads, risk assets follow

article-image

Ondo Finance’s acquisition of blockchain development company Strangelove follows its buy of Oasis Pro

article-image

Cryptocurrency and stock traders alike had a lot to unpack Wednesday