U.S.-based cryptocurrency exchange Kraken has opened trading in the controversial Bitcoin Cash SV, but has warned clients about the high risk associated with trading the new bitcoin cash token, the company announced in a November 18, 2018, blog post.
Users Face ‘Extremely High Risk’
Kraken, one of the largest U.S.-based cryptocurrency exchanges, has begun trading the controversial Bitcoin Cash hard fork, Bitcoin Cash SV. The exchange had initially said that it would only support the Bitcoin Cash ABC hardfork, the second product of a contentious hard fork of the BCH network that took place on November 15, 2018.
However, Kraken stated that while it’s crediting its clients with BCH SV and enabling its trading, the cryptocurrency doesn’t meet its usual listing requirements.
The exchange warned its users against investing in BCH SV, calling it an “extremely high-risk investment.” Kraken warned users of several red flags with SV, such as the lack of any known wallets supporting replay protection, support in major block explorers, and constrained supply due to limited wallet support.
Kraken’s blog post also suggested that Bitcoin Cash SV representatives tended to be “openly hostile towards other chains,” which could work against their interest, thus increasing the risk for the exchange’s clients.
Whales Threaten the Stability
Apart from an increased security risk, Kraken users who wish to trade in the new BCH strain also face risks posed by other traders. In its blog post, the exchange warned its users that some of the whales had indicated their intention of dumping all their SV as soon as possible, which could result in a massive price drop.
Users were also alerted about the fact that they would have to bear any custodial losses of SV taken from attacks originating with nChain or its affiliates, as all losses will be socialized among Kraken BSV holders. “Given the volatile state of the network and threats that have been made, Kraken cannot guarantee perfect custody of BSV,” the blog post said.
Jihan Wu, the founder, and chief executive officer of cryptocurrency mining giant Bitmain, was one of the prominent figures in the industry that have threatened to dump all of their Bitcoin Cash SV. Wu, who is known to hold a significant amount of Bitcoin Cash, tweeted on Wednesday:
“I am wondering when I can deposit my BSV token into the exchange to sell.”
The exchange is currently monitoring both networks and will not open deposits or withdrawals for either token until it believes “it is safe to do so,” the blog post explained.