ZachXBT has downgraded Kraken from S-tier to B-tier in his centralized exchange ranking, citing concerns over token-listing due diligence, low-quality market listings and the exchange’s recent breach-response communication.
The downgrade came after ZachXBT escalated criticism around exchange listings for tokens he described as low-quality or manipulated, naming M, RAIN, RIVER and RAVE among the examples. Kraken currently supports MemeCore M, Rain, RaveDAO and River across its platform, placing the exchange directly inside the broader debate over how centralized exchanges screen speculative assets before opening them to users.
The move is notable because Kraken has long been viewed as one of crypto’s stronger security-first exchanges. ZachXBT’s downgrade does not accuse Kraken of market manipulation. It targets the gatekeeping layer: whether major exchanges are doing enough before giving thin, controversial or allegedly manipulated tokens access to centralized liquidity.
ZachXBT Targets Listing Standards
ZachXBT’s criticism centers on due diligence. His view is that major exchanges should not treat every trending token as listing-ready, especially when a token has weak product traction, opaque team links, concentrated supply, aggressive market-making or signs of onchain price support that may not reflect real demand.
The warning follows his earlier community alert around Rain Protocol, where he raised concerns over RAIN’s valuation, product traction, wallet links and possible overlap with earlier controversial crypto projects. RAIN’s market capitalization had moved into multibillion-dollar territory while protocol-level numbers remained much smaller, making it one of the clearest examples of the gap between token valuation and visible usage.
That matters for Kraken because centralized listings can legitimize a token for ordinary users. A listing does not guarantee safety, but it often gives traders the impression that a project has passed a meaningful review. When the listed asset later faces manipulation claims, insider-flow allegations or sharp liquidity reversals, the exchange’s screening process becomes part of the story.
Kraken Breach Response Also Draws Scrutiny
ZachXBT also tied the downgrade to Kraken’s recent public security disclosure, arguing that the company’s communication did not clearly address victim compensation.
Kraken previously said its systems were not breached, client funds were never at risk, and the incident involved inappropriate access to limited client support data tied to insider behavior. The affected accounts represented about 2,000 clients, or roughly 0.02% of Kraken’s user base, and the company said it notified impacted users while working with law enforcement.
The compensation question now sits beside Kraken’s listing issue. Coinbase took a different approach after its 2025 insider-driven support-data incident, saying it would reimburse retail customers who were tricked into sending funds to attackers as a direct result of the breach. Coinbase also created a $20 million reward fund for information leading to arrests and convictions.
Bybit also moved quickly after its 2025 hack, with CEO Ben Zhou saying the exchange had fully closed the ETH gap and would return to 100% 1:1 backing for client assets. ZachXBT’s point is that large exchanges are now judged not only by whether funds remain safe, but by how clearly they handle affected users, compensation and public accountability after security incidents.
$100K Bounty Raises Pressure On Token Insiders
ZachXBT also increased his personal bounty to as much as $100,000 for information tied to alleged centralized-exchange market manipulation schemes. He said the bounty could cover incriminating business contracts, full chat logs, active market-maker agreements or similar insider material connected to questionable token activity.
The bounty adds another layer of pressure to the RAIN story and similar tokens. If insiders provide credible documentation around listing arrangements, market-making terms, token allocation, artificial liquidity or coordinated price support, the debate could move from social-media suspicion into evidence that regulators, exchanges and market participants can review.
The legal boundary matters. Whistleblower material, business records and chat logs need lawful handling before they can support serious claims. Allegations around manipulation, insider coordination or exchange negligence remain allegations unless confirmed by documents, counterparties, regulators or courts.
CEX Listings Face A Trust Test
The downgrade puts Kraken inside a larger exchange-trust debate. Centralized exchanges still act as the main liquidity gateway for most retail traders. That position gives them power, but it also creates responsibility around listing quality, market surveillance, liquidity controls and communication after security events.
Low-float tokens, aggressive market makers, thin real usage and concentrated insider supply can create price structures that look liquid until confidence breaks. Once a major exchange lists those assets, losses can spread from onchain insiders to ordinary exchange users who may not understand the market structure behind the token.
Kraken’s reputation is not erased by one downgrade. The exchange still has a long operating history and has repeatedly emphasized security, proof-of-reserves practices and client-fund protection. The ZachXBT downgrade shows that exchange trust is becoming harder to defend with custody security alone.
The next test is transparency. Kraken can reduce pressure by clarifying how it reviews high-risk token listings, how it monitors market-maker behavior, how it handles suspicious liquidity patterns and whether affected users from the support-data incident received any compensation or protective support beyond notification. Until then, the downgrade gives traders a cleaner warning: exchange listings are not endorsements, and market structure matters as much as the exchange logo beside the asset.
