Research summary
One KAU is meant to be one gram of gold and one KAG one troy ounce of silver. Two companies issue tokens under those names, and they are not the same asset. Kinesis Cayman, a Cayman Islands company, issues native KAU and KAG on its own blockchain, a fork of Stellar. Its terms say the holder keeps legal title to allocated bullion that Kinesis holds as bailee, stored through Allocated Bullion Exchange (ABX) in thirteen vault locations. KMS Labs S.A., a Panama company, issues ERC-20 KAU and KAG on Ethereum against native tokens it holds. Its terms say the ERC-20 holder has “no legal, equitable or beneficial right, title or interest in or to the Reserves.” On 2026-09-23 the KMS Labs reserve account held 1,640,000 KAU, equal to about 64% of the 2,565,133 KAU in circulation at the April 2026 audit. Most of what trades as KAU is now the Panama company’s token, not the bailment. The adverse assessment rests on three facts. First, the custodian is not independent of the issuer: Thomas Coughlin signs the June 2026 audit letters both as CEO of Kinesis Money and as CEO of ABX, and two of the vault locations are Kinesis’s own. The only physical check is a Bureau Veritas inspection that ABX commissions twice a year, weighing a sample of a little over 5% of the metal. Second, the ERC-20 tokens give the holder a promise, not property: redemption into native tokens is at KMS Labs’ “sole discretion,” no independent check of its reserve has been published, and single keys on Ethereum can mint, pause, deny-list any address, and grant themselves the power to move a listed balance or replace the code. Third, the “yield” Kinesis advertises is a rebate of transaction fees: 0.50% over the last twelve months on gold and 0.05% on silver, revocable at any time, and not paid on ERC-20 tokens at all. A client who wants gold or silver is better served by a physically backed ETF held at an independent custodian.
Observable review triggers
- ABX, or whoever holds the bullion, no longer shares officers with Kinesis, or Kinesis names an independent custodian
- A reasonable-assurance attestation by an independent firm covers the bullion behind native KAU and KAG
- KMS Labs publishes an independent check of its reserve account, or its reserve falls below ERC-20 supply
- KMS Labs grants ERC-20 holders a property right in the reserve or a firm redemption path, or corrects the reserve addresses in its terms
- Any role on the ERC-20 KAU or KAG contracts or their deny lists changes hands, the recovery or upgrader role is granted, or an address is deny-listed
- Kinesis changes the fee-pool shares, suspends yields, or a regulator acts against Kinesis, ABX, or KMS Labs
Facts on file
- Research assessment
- Adverse
- Client selection
- Not considered
- Exposure
- tokenized commodity
- Chains examined
- Ethereum
- Instruments
- KAU, KAG
- Reviewed
- Next review