Crypto Exchange Kraken Received 475 Law Enforcement Inquiries In 2018

News | January 7, 2019 By:

San Francisco-based crypto exchange Kraken has received nearly three times more law enforcement inquiries in 2018 compared to 2017.

In a twitter post, Kraken said that in 2018, it responded to a total of 475 law enforcement inquiries, while in 2017 there had been only 160. In 2016, Kraken only received 71 inquiries.

315 of the 475 inquiries in 2018 were issued by US law enforcement agencies, including the Federal Bureau of Investigation (FBI), Homeland Security Investigations (HSI), Internal Revenue Service (IRS), Securities and Exchange Commission (SEC) and other government bodies.

“You can see why many businesses choose to block US Users. Cost of handling subpoenas (regardless of licenses) is quickly becoming a barrier to entry,” Karken said. “US agencies are much more active and are much less surgical. For many requests, we have no matches. It wouldn’t be surprising to find that the same subpoenas go out to everyone in the hopes that a match will be found.”

Kraken further said that law enforcement inquiries are so taxing because they often require a significant amount of education and back-and-forth.

“We’ll get requests for ‘all transactions’, which could be petabytes of data when they actually only need the withdrawals from last week for one guy,” Karken said.

In April 2018, Jesse Powell, Chief Executive Officer of Kraken, refused to comply with the New York attorney general’s fact-finding inquiry into the policies and practices of cryptocurrency exchanges. At the time, Powell said that while the exchange is “happy to help government understand our business,” the request “is not the way to go about it.”

“When I saw this 34-point demand, with a deadline two weeks out, I immediately thought, ‘The audacity of these guys — the entitlement, the disrespect for our business, our time!’,” Powell said at the time “The resource diversion for this production is massive. This is going to completely blow up our roadmap. Why don’t you try extracting this information from those businesses actually operating in your state?”