Kraken, one of the world’s largest bitcoin exchanges, which recently started offering trading in the second most valuable cryptocurrency – the Ether (ETH), said it will temporarily suspend any deposit and withdrawal transfers of Ethers during the expected DAO “hard fork”.
Kraken will disable the Ether deposits and withdrawals approximately one hour before the hard fork activates, but trading in the cryptocurrency will remain as usual. The deposits and withdrawals will be enabled after the DAO returns to normal functionality.
“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,“ Kraken said. „We think this is unlikely, but depending on how things go, we may have to wait several days or more to be safe. You should not send any Ethereum or DAO deposits to Kraken until we have enable deposits.“
Even though trading in Ether will remain active, Kraken recommends to its clients to close all margin positions before the hard fork is activated, because of likely high volatility and unusual market behavior and possible high risk. The exchange notes that it may also do a partial forced closure of open positions. “Margin traders who are uncomfortable with this possibility should close their positions prior to the start of the fork,“ Kraken said.
The resetting/rolling back of the ether’s Distributed Autonomous Organization (DAO) to a previous date, a.k.a. the “hard fork”, is expected to start either on July 20 or 21, depending on the time zone, and will practically shut down the current version of the DAO. The Ethereum developers will create a new version of the network with different rules and the miners, exchanges and other major apps in it will decide if they want to be part of the new version or the original.
Between April 30 and May 21, the DAO, which is in essence a humanless venture capital firm, had raised $150 million from roughly 11,000 investors, in what’s considered the biggest crowdfunding effort in history. The hard fork was deemed the only suitable solution after a hacker broke into the DAO in June and stole Ethers worth $50 million by today’s exchange rates. He said he simply exploited a technical loophole in the DAO.
The proposed hard fork was met with resistance by some in the cryptocurrency community, but its proponents argued it is the only viable option to improve the security of the DAO and make sure there are no new flaws in the system.