Kraken Acquires Breakout Trading Platform, Is An IPO Next?

Kraken acquired Breakout, a prop crypto trading firm. It plans to allow a funded trading plan, where users can apply to invest in crypto using $200,000 in credit. The exchange would retain around 20% of the ensuing gains.

Still, Kraken’s community has been a little skeptical, claiming that this acquisition doesn’t have a lot of synergy with its other offerings. Instead, this deal may be a way to lay the groundwork for a future IPO.

Kraken’s Breakout Deal

Kraken has been looking at a few new expansions recently, as the popular CEX has shown an interest in tokenizing US stocks and ETFs. Its latest acquisition, however, is something of a curveball. Kraken has purchased Breakout, a prop trading firm, potentially opening new options for customers:

According to Kraken’s blog, its users will now be able to access Breakout’s funded trading mechanisms. Essentially, this means that retail investors can apply to gain access to $200,000 in live trading capital.

Approved users can then use this capital to make real token investments, and Kraken will keep around 20% of the profits.

Breakout’s own fan community has been overjoyed at the Kraken buyout. The firm was established in 2023 by two veteran crypto traders, and this deal is a major coup. It’s not clear how the company’s pioneers will be compensated for this deal, but it’s a noteworthy milestone of success for this young startup.

Is Kraken About To Go Public?

The confusion, instead, is coming from Kraken’s community. Kraken’s press release mentions some ways that it and Breakout will both benefit, but there isn’t a ton of natural synergy. Some enthusiasts have instead speculated that the exchange is laying the groundwork for a future IPO:

Since Circle’s IPO in June proved massively successful, other major crypto firms have either conducted or are seriously considering their own launches. Kraken’s funded trading with Breakout pays out in USDC, representing another possible connection. Maybe this exchange is planning to join the trend?

If Kraken were trying to launch an IPO, the Breakout acquisition would fulfill many of its goals. The deal would juice user activity and create a new revenue stream, while also adding extra attention to Kraken’s brand.

Other Web3 companies have conducted similar acquisitions in the lead-up to their own IPOs.

Still, this is all speculation. Neither Kraken nor Breakout has given any direct indication that an IPO is coming. This deal is a big development all on its own. If it also signaled a possible future business deal, that’d be a cherry on top.