Kraken Exchange to Suspend Ethereum Deposits Over DAO Hard Fork

The process is expected to end in two days but the exchange might wait a few extra days for safety.

The process to hard fork the Ethereum blockchain is causing Kraken, one of the largest cryptocurrency trading venues in the world, to warn clients it will stop all ETH deposits and withdrawals until the dust settles. The block on which the hard fork will occur is set at 1920000, which is expected in a day or two, and Kraken said it will disable ETH deposits approximately an hour before the activities start.

Answering about how long it could take, Kraken writes: “Although the process may go smoothly and quickly, we want everyone to understand that we will be very cautious about waiting for a clearly dominant chain (with the most work on it) to emerge before enabling ETH and DAO funding again. We think this is unlikely, but depending on how things go, we may have to wait several days or more to be safe.”

The exchange also recommends closing margin positions since the fork may bring a lot of unpredictable volatility or other unusual market behavior and make margin trading much riskier than normal. Additionally, Kraken warns: “Depending on how the fork resolves, in order to manage the overall exchange risk, we may need at some point to do at least a partial forced closure of margin positions. This means that margin traders may possibly experience at least a partial forced closure of their positions.”

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What is a ‘hard fork’?

Following the attack on the DAO, which saw over $50 million in ETH stolen, the creator of Ethereum, Vitalik Buterin, supported the idea of splitting the blockchain and resetting it as much as possible to the state before the hacking. Late last week, the Ethereum community voted to adopt the measure and now it is up to those actually operating the network to adopt it or not.

This solution was highly criticised by members of the cryptocurrency community, mainly in online forums, as a betrayal of some of the principles of a currency controlled only by programming code and not by people or central banks. The proponents of the hard fork are hitting back hard against this notion right now.

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