Kraken warns of extremely high risk when investing in Bitcoin Cash SV

The cryptocurrency exchange has urged traders to hold fire when it comes to the new Bitcoin Cash SV protocol.
Written by Charlie Osborne, Contributing Writer

Kraken has warned would-be investors of Bitcoin Cash SV (BSV) that the tokens should be considered an "extremely high risk investment."

The cryptocurrency exchange said in a blog post on Sunday that BSV will be supported by the exchange alongside Bitcoin Cash (BCH), but investing in the former comes with a real degree of risk.

As Bitcoin (BTC) hits a new low in 2018, managing to drop by over a quarter in value to $4,319 in a week at the time of writing, BCH has also experienced heavy losses following a contentious fork on November 15 resulting in the creation of separate BSV and BCH chains. Kraken says that following the fork, BSV does not at present meet standard listing requirements.

"It should be seen as an extremely high-risk investment," the cryptocurrency exchange says. "There are many red flags that traders should be aware of."

These "red flags" include the lack of known wallets which protect against replay attacks, a lack of support in major block explorers, reports that miners are potentially operating at a loss and limited wallet compatibility. In addition, Kraken says that the company has "done only very minimal code review."

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Another element of note that Kraken brought up is BSV representatives being "threatening and openly hostile toward other chains."

Bitcoin Cash SV was created by nChain, a company owned by Craig Wright, who claims to be the creator of Bitcoin, Satoshi Nakamoto.

Bitcoin Cash advocate Roger Ver and Wright have been clashing for months, with insults being lobbed over email by Wright and Ver publicly doubting Wright's claims of being the blockchain visionary.

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The fight, which has included arguments over hash rates, block sizes, and Satoshi's original vision, has led to a number of exchanges choosing not to support the token until the market has stabilized and a better understanding of how the fork has changed the Bitcoin landscape.

"Custodial losses taken on due to attacks originating from nChain or its affiliates will be socialized among all BSV holders on Kraken," the exchange added. "Given the volatile state of the network and threats that have been made, Kraken cannot guarantee perfect custody of BSV."

Kraken has now launched BSV trading. Kraken will be crediting all customers who held BCH at the time of the hard fork with an equal balance in the token.

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"Our research does not in any way consider whether the price is currently justified, or likely to go up or down in the future," Kraken says. "You should always consider the available liquidity when trading in any market and manage this risk accordingly."

In related news, after trading for only a short while, South Korean cryptocurrency exchange Zeniex has closed its doors. The exchange cited regulatory hurdles after discontinuing its ZXG token amidst a general slowdown in the country's cryptocurrency market.

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