Kraken Freezes $12M While Memecore Scrutiny Grows

Concerns center on insider activity, pre-launch withdrawals, and inflated token valuation.

Kraken received public recognition this week for its role in a cross-border fraud operation that froze over $12 million in illicit funds. Separately, blockchain investigator ZachXBT alleged the exchange listed Memecore (M), a token he linked to $7.9 million in suspicious pre-launch withdrawals. He also alleged insider activity that inflated the token's valuation ahead of trading.

Payward, the company behind Kraken, participated in Operation Atlantic, a coordinated enforcement initiative spanning the UK, the United States, and Canada. The operation targeted crypto-related fraud with a particular focus on approval phishing schemes, a method that tricks victims into granting wallet access to malicious actors, typically through deceptive smart contract interactions that authorize withdrawals from the victim's wallet without their ongoing consent.

Investigators identified more than $45 million in suspected criminal proceeds, froze over $12 million linked to illicit activity, and flagged upwards of 20,000 potential victims across multiple jurisdictions.

The investigators noted that Kraken's contributions included data sharing, direct identification of affected users, and embedding staff alongside law enforcement during the investigation. Once scammers obtain wallet access, asset recovery is rarely achieved, and most enforcement efforts are directed at prevention. The enforcement recognition arrives alongside separate scrutiny of Kraken's listing practices.

ZachXBT's findings concern $M, which debuted for trading in July 2025. ZachXBT linked $7.9 million in suspicious withdrawals to a cluster of newly created addresses that, collectively, came to hold assets now valued at close to $39.8 million, reflecting the token's price appreciation since launch. His analysis also pointed to what he characterized as insider activity that allegedly inflated the token's apparent valuation ahead of its launch.

Blockchain data, according to ZachXBT's findings, suggests a wallet believed to be controlled by the project's team transferred millions of tokens to exchange-linked addresses in the period immediately before trading opened.

He also flagged concerns about the project's reported metrics: the headline figures leaned heavily on trading volume and user engagement driven by incentivized campaigns with little evidence of real-world use or organic user growth.

ZachXBT also issued a caution to traders considering short positions against heavily manipulated tokens, noting that insider-controlled markets can inflict losses regardless of a trader's position.

ZachXBT's Memecore findings were published within days of Kraken's Operation Atlantic recognition. ZachXBT named several other projects in recent weeks, including RAVE, SIREN, MYX, COAI, PIPPIN, and RIVER, as exhibiting what he characterized as highly questionable price action, with some of those tokens having traded on major centralized exchanges like Binance, Bitget, and Gate.io before his publications.

At the time of publication, Kraken has not issued a public response to ZachXBT's investigation into the Memecore listing. Memecore has also not issued a public statement addressing the findings.