From Wikipedia, "In Norwegian and Swedish, Kraken is the definite form of krake." Since "Kraken" is already the definite form, why do we add a "the" prior to "Kraken"? Or "Kraken" is a word taken from another language, therefore its grammatical property was dropped?
I think it's because of the way the word entered the English language. In the earliest appearances of the word I could find (1785), it's used as if "Kraken" were a species of fish, in the same paragraph as "the Sturgeon" and "the Whale." It's even implied that there are many Kraken plying the seas:
Whether the vanishing island, Lemair, of which Captain Rodney went in search, was a Kraken, we submit to the fancy of our readers.
As "the Kraken" subsequently drifted from being a collective noun towards being a singular creature, the original construction stuck because it was familiar.
Also there's how we how we idiomatically use proper nouns. Saying "I saw the Kraken in the Pacific" sounds like I am referring to one individual from a class of creatures, whereas "I saw Kraken in the Pacific" makes it sound like the beast and I are on a first-name basis.
I don't think there's a hard rule here, since it's a mythical beast and thus in the province of creative writers who have leeway to bend words a little.