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Tokenized commodities

Kinesis gold and silver (KAU, KAG)

Not approved The evidence weighs against it
Verdict
Not approved
The evidence weighs against it
Who can freeze it
Protocol
Another single key (0x6eff…9138) can pause and edit the deny list, and a third (0x4b1f…c8dd) mints.
Withdrawals
Kinesis does not exclude US persons.
Reviewed
2026-09-23 · next 2026-12-23
Researched memo

Summary

Ketju does not approve Kinesis gold and silver (KAU, KAG): the vault operator shares a chief executive with the issuer, and most KAU now trades as a Panama company’s token that gives the holder no right to the metal. One KAU is meant to be one gram of gold and one KAG one troy ounce of silver. Kinesis Cayman issues native KAU and KAG on its own blockchain, a fork of Stellar. KMS Labs S.A., a Panama company, issues ERC-20 KAU and KAG on Ethereum against native tokens it holds. On 2026-09-23 the KMS Labs reserve account held 1,640,000 KAU. That is about 64% of the 2,565,133 KAU in circulation at the April 2026 audit. Thomas Coughlin signs the June 2026 audit letters both as CEO of Kinesis Money and as CEO of Allocated Bullion Exchange (ABX), the custodian. The only physical check is a Bureau Veritas inspection that ABX commissions twice a year. KMS Labs redeems ERC-20 tokens at its “sole discretion,” has published no independent check of its reserve, and holds single keys that can freeze any address. The “yield” Kinesis advertises is a rebate of transaction fees: 0.50% over the last twelve months on gold and 0.05% on silver. Kinesis can revoke it at any time, and it does not pay it on ERC-20 tokens. A physically backed ETF held at an independent custodian gives a client gold or silver with fewer of these risks.

Research

How it works

Native KAU and KAG exist only on the Kinesis blockchain. Kinesis Cayman’s Terms of Use (effective May 28th 2026) define “Allocated” as bullion “to which a natural or legal person has legal title, with Kinesis holding it on that person’s behalf as bailee.” They say legal and beneficial title stays with the holder until the tokens move to another address. The same schedule also says each holder has “an undivided interest in the total pool of Bullion” in proportion to holdings, so the holder owns a share of a pool and no numbered bar. Kinesis says the metal never appears on its or ABX’s balance sheet.

KMS Labs S.A. (Panama, company number 155772003) issues the ERC-20 tokens under a different contract. It mints them at 0x14DAB79f…EA52 (KAU) and 0x56Ba8B58…1B8e (KAG). It holds native tokens in a reserve account on the Kinesis blockchain, GAJ6XIVD…6ERC, which needs two of four signers to move funds. On 2026-09-23 that account held 1,640,000.099 KAU and 35,000.099 KAG against 1,640,000 ERC-20 KAU and 35,000 ERC-20 KAG. KMS Labs’ terms say the ERC-20 holder has “no legal, equitable or beneficial right, title or interest in or to the Reserves.” They also say KMS Labs keeps whatever the reserve earns, and that “the issuer of the Kinesis Tokens that make up the Reserve is not the issuer of the Tokens and has no obligations to holders of the Tokens.” The KMS Labs site says: “ERC-20 KAU/KAG holder’s counterparty is KMS Labs, not Kinesis.”

The KMS Labs terms define the reserve tokens by two addresses on the public Stellar network, KAU-GA3X…R44HXE and KAG-GDN6…H3HXH5, and not on the Kinesis blockchain. On 2026-09-23 each of those Stellar assets had 100 units outstanding across three or four accounts. The terms that govern a token worth about $225 million name the wrong reserve.

Custody and audit

Kinesis stores the metal through ABX, an Australian company (ACN 149 681 489) at the same Brisbane address as Kinesis Australia, in thirteen vault locations. The April 2026 audit pack has three letters. ABX engaged Bureau Veritas Commodities UK, which inspected the gold and silver held for Kinesis Cayman at Brinks, Malca Amit, Loomis, Atlas, and OZL sites and at “Kinesis Batam Indonesia” and “Kinesis Istanbul.” Bureau Veritas weighed “a sample of over 5.0% of the total weight” and found no non-conformities. It said the vault reports, ABX’s system, and the holdings reconcile. Thomas Coughlin signs both the ABX letter and the Kinesis letter, dated 3 June 2026, once as CEO of ABX and once as CEO of Kinesis Money. The Kinesis letter counts 2,565,133.465 KAU against 2,567,133.466 grams of gold and 3,683,448.057 KAG against 3,688,827.985 ounces of silver on 20 April 2026. The surplus is a reserve of two 1 kg gold bars and five silver bars.

Bureau Veritas inspected on agreed procedures and gave no attestation to a reasonable-assurance standard. ABX hires the inspector, runs the vault network, and shares a chief executive with the issuer. A bailment protects the holder if Kinesis fails only if the bailee’s books show which metal belongs to whom. Here the bailee and the bookkeeper answer to the same management. The audits also cover native tokens only: KMS Labs says independent verification of the ERC-20 reserve “will be disclosed separately.”

Yield

Every transfer on the Kinesis blockchain pays 0.45% of its value, capped at 25,000 KAU or KAG, and trades on the Kinesis Exchange pay 0.22%. Those fees go into a Master Fee Pool that Kinesis pays out monthly in metal. Holders who pass onboarding share 15% of it in proportion to their daily balances. Users who trade or spend KAU and KAG share 10% as the “Velocity Yield.” Minters, referrers, KVT holders, and partners take other shares, and Kinesis says it returns over half of all transaction fees this way. Kinesis’s holder page on 2026-09-23 showed a twelve-month holder yield of 0.50% on gold and 0.05% on silver, and a July 2026 gold payout of $155,316. Other users’ transfer fees pay for the rebate, so it falls when activity falls. Schedule 6 lets Kinesis “amend, suspend or terminate any Yield offering to You individually at any time,” for reasons including citizenship or residence, and says accrued yields “shall no longer be payable.” Section 6.2.2 excludes ERC-20 tokens: Holder Yield is paid “only on Kinesis-native KAU/KAG.” The ERC-20 holder pays the price of the reserve and gets none of its income, which KMS Labs keeps.

Who controls it

On the Kinesis blockchain KAU and KAG are each a network’s native asset, as lumens are on Stellar. The Horizon servers for both networks (kau-mainnet and kag-mainnet at kinesisgroup.io) list no issued assets and no asset flags, so Kinesis has no freeze or clawback flag to set. Kinesis emits new tokens from its emission account after a deposit of metal. Redeemed tokens go back to the Kinesis root account, and Kinesis destroys them. Kinesis runs the network as its own fork. Its terms describe consensus “among trusted accounts,” so the operator of the software is also the issuer. Kinesis says it never takes custody of tokens in a self-held Kinesis Wallet. It may freeze or lock funds held in a Kinesis Exchange or Mint account and suspend access “for any reason.” We took this from the documents and the Horizon servers, because Ketju’s contract checks do not yet read a native asset on a Stellar fork.

On Ethereum both tokens run the same Fireblocks ERC20F code behind upgradeable proxies. Every transfer checks an access registry. On both tokens that registry is a Fireblocks DenyList, which lets an unlisted address through, so adding an address freezes it. A role holder can then call recoverTokens to move a listed address’s tokens to itself. For KAU, one key (0xe584…a8ae) is the token’s default admin and contract admin and the deny list’s admin and upgrader. Another single key (0x6eff…9138) can pause and edit the deny list, and a third (0x4b1f…c8dd) mints. KAG has the same shape with 0x2494…b10f, 0x3e96…b493, and 0xe560…498e. No address held the token’s upgrader or recovery role on 2026-09-23, but the default admin can grant either in one transaction. KMS Labs’ terms let it freeze “at its sole discretion” without notice and seize frozen tokens.

Eligibility and withdrawals

Kinesis does not exclude US persons. It lists ACH purchases from the United States and offers its card to US residents, though US residents cannot buy KAU and KAG with the card. On the Kinesis Exchange the smallest order is 0.00001 KAU or KAG; minting new tokens takes at least 100 KAU or 200 KAG. KMS Labs lets any “Eligible User” hold the ERC-20 tokens, meaning anyone not sanctioned and not resident in its restricted list, which starts with Panama itself. Only Kinesis redeems for metal. It redeems in steps of 100 KAU (100 grams, about $13,700 at the 2026-09-23 price) or 200 KAG (200 ounces, about $12,900). It charges 0.45% of the order, a $100 fee, and postage, and it says each request is “managed on a case by case basis.” An ERC-20 holder must first persuade KMS Labs to redeem, on terms KMS Labs sets, and then open a Kinesis account. KMS Labs “makes no representation or warranty that there will be direct redemption mechanisms available at all times.”

Comparison

We compare KAU with PAX Gold and Tether Gold. Native KAU promises more on paper, legal title under a bailment, but Kinesis offers weaker proof. KPMG attests PAXG monthly against bars at LBMA vaults held by an OCC-supervised trust bank. Kinesis relies on a sample inspection hired by a custodian that shares its CEO. ERC-20 KAU is weaker than either, because the holder owns nothing, KMS Labs redeems at its discretion, and nobody has published a check of the reserve. We also compare KAU with a physically backed gold or silver ETF. Such an ETF holds metal at an independent custodian, and authorized participants create and redeem shares daily. Compared with that ETF, Kinesis adds a related-party vault network, a private chain run by the issuer, and a fee rebate sold as yield. For most of the KAU supply it also puts a second company between the holder and the metal. Ketju will review Kinesis again if the custodian becomes independent of Kinesis, or if a reasonable-assurance attestation covers both the bullion and the KMS Labs reserve. Ketju will also review it if KMS Labs grants ERC-20 holders a property right and a firm right to redeem.

Sources

Each claim above comes from one of these sources. Where Ketju could not verify a number, the memo states that.

The asset and the chain

This memo covers the protocol. A position also holds an asset and settles on a chain. Whichever of the three holds the most power over the position decides who can freeze it. These tables describe control and do not judge quality.

ChainVerdictFreezeWhat it can do
EthereumApproved No freeze key Ethereum has no sequencer, no upgrade key and no operator who can be compelled to act; rule changes require social consensus.
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