U.S.-based cryptocurrency exchange Kraken has warned users against the perceived risks of trading the new bitcoin cash token, Bitcoin SV (BCH SV) – one of two competing versions of the cryptocurrency created when the blockchain split during last week’s hard fork upgrade.
Kraken said in a blog post on Sunday that, while it has credited BCH SV tokens to its clients since the fork and has also launched trading in SV, the new crypto “does not meet Kraken’s usual listing requirements” and “should be seen as an extremely high risk investment.”
The exchange highlighted a number of “red flags” for traders, including that there are no wallets yet supporting replay protection – a way to prevent a transaction occurring on both BCH blockchains simultaneously.
Additionally, it said, supply is “temporarily constrained” due to limited wallet support, while miners appear to be operating at a loss. Further, BCH SV’s future existence may be “mutually exclusive” with other blockchains as its representatives are “threatening” and “openly hostile” toward other blockchains.
Kraken also said that some major holders of the token have already suggested that they would be “dumping” the token as soon as they could
The split of the bitcoin cash blockchain took place on Nov. 15, when two of various versions of the code pushing different technical roadmaps found sufficient support from miners. Two new tokens were formed as a result: Bitcoin ABC (BCH ABC) and BCH SV.
Before the split, Kraken had announced that it would only support BCH ABC, but in the latest post, the exchange said that it is, after all, supporting BCH SV following the publication of a protocol and roadmap by nChain, the firm that leads development of the SV implementation.
Kraken further indicated that it could claw back any of its own losses arising from certain issues with the new token from SV-holding users, saying:
“Custodial losses taken on due to attacks originating from nChain or its affiliates will be socialized among all BSV holders on Kraken. Given the volatile state of the network and threats that have been made, Kraken cannot guarantee perfect custody of BSV.”
The exchange is currently monitoring both both networks and will not open deposits or withdrawals for either token until it believes “it is safe to do so.”
According to data from CoinMarketCap, the BCH SV token has been trading in the $70–$138 range since the fork, and is currently at around $88. BCH ABC has been largely trading between $250 and $300 since the split and is currently trading at around $233.
Jesse Powell image via Consensus