Kraken, a cryptocurrency technology platform, announced it has acquired Breakout, a proprietary trading firm. Breakout provides traders access to capital for executing strategies and allows them to trade crypto through funded accounts after passing an evaluation, without using personal funds.

Kraken is the first cryptocurrency exchange to enter the proprietary trading space. Unlike traditional prop trading firms, which provide funded accounts to traders without offering an exchange platform, Kraken combines its exchange infrastructure with Breakout’s evaluation-based trading model.

Kraken Adds Funded Accounts for Traders

“Breakout gives us a way to allocate capital based on proof of skill rather than access to capital itself. In a world that is rapidly shifting from who you know to what you know, we want to build systems that reward demonstrated performance, not pedigree,” commented Arjun Sethi, co-CEO of Kraken.

The acquisition expands Kraken’s product offerings for advanced traders. Through Breakout, qualified traders can access up to $200,000 in notional capital.

To qualify, traders must purchase and pass an evaluation and maintain performance above set drawdown limits. Traders who meet these requirements receive funded accounts and can retain up to 90% of any profits. Payments are made directly on-demand.

Breakout Founded 2023, Raises Seed Funding

Breakout is a crypto-native proprietary trading firm founded in 2023 by Alex Miningham and Dylan Loomer. Operating as “Breakout Trading Group, LLC,” the firm is headquartered in Tampa, Florida. In July 2024, Breakout raised $4.5 million in a seed funding round led by RockawayX, Mechanism Capital, IOBC Capital, C² Ventures, and Round13 Capital.

Breakout Traders Gain Access to 50+ Pairs

Kraken said the move supports its goal of enabling experienced traders to deploy capital in crypto markets. Breakout will benefit from Kraken’s infrastructure and global reach. Over time, Breakout will be integrated into the Kraken Pro platform for eligible users.

You may find it interesting at FinanceMagnates.com: Kraken Launches Crypto Services Across 30 EEA Countries Under MiCA License.

Breakout allows traders to develop strategies across more than 50 crypto pairs. Leverage of up to 5x is available on BTC and ETH contracts. Traders must pass evaluations to receive capital and must requalify if drawdown limits are breached.

Prop Trading Brings Risks and Complexity

Entering prop trading presents several challenges for exchanges. Regulatory scrutiny can arise as authorities assess how such activities fit within existing rules. Risk management is important to limit potential losses from funded traders.

Read More: “Over-Gamification Attracts the Wrong Traders,” Swiset COO Warns on Prop Trading.

Market integrity must be maintained to prevent manipulation or abusive strategies. Operational complexity can increase when integrating new trading models, and competition from established prop trading firms can affect trader adoption.

Expanding Services with NinjaTrader Acquisition, Cyprus License

Kraken announced plans to acquire the futures trading platform NinjaTrader for $1.5 billion. The acquisition aims to combine traditional finance tools with crypto trading and expand services for retail and institutional users.

In Europe, Kraken launched crypto derivatives under a Cyprus license. The license, obtained through a Cypriot Investment Firm approved by CySEC, allows the exchange to offer additional products and strengthens its regulatory presence in the region.