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Costs Spiral for Exchanges as Police, Regulators Step up Scrutiny

Exchange Kraken

Regulation

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Tim Alper

Author

Tim Alper

About Author

Tim Alper is a British journalist and features writer who has worked at Cryptonews.com since 2018. He has written for media outlets such as the BBC, the Guardian, and Chosun Ilbo. He has also worked...

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Last updated:

June 26, 2023

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American and international regulators and cyber police forces intensified their scrutiny of cryptocurrency exchanges last year – with the Kraken platform stating that it was hit with a whopping 710 information requests from global law enforcement agencies in 2019.

The company bemoaned its fate, claiming that compliance is becoming increasingly expensive and burdensome for exchanges.

Kraken stated,

“[The] trend is obvious. Costs are increasing, even in a relatively flat market.”

Per a tweet that featured a slide from its latest compliance report, Kraken pointed out a massive upward trend in policing. Kraken says it was served with 475 similar requests in 2018 – and just 160 in 2017.

Although British authorities lodged 86 requests, the vast majority of requests came from the United States, although Kraken stated that “other geos [are] gaining fast.”

The biggest single requesting agency was the FBI, with 116 requests. The American Drug Enforcement Agency made 73 requests, while the regulatory Securities and Exchange Commission and tax authority the Internal Revenue Service also made a significant number of requests.

Some Twitter users speculated on the escalating costs of keeping in line with compliance-related matters.

Regardless, Kraken appears to be in rude health – after all, the company only recently wrapped up the acquisition of the Circle Trade over-the-counter (OTC) desk in December.

Kraken added Tezos staking services in December – although in the past few weeks, it has had to contend with a civil lawsuit brought forward by an ex-employee who says the exchange has “violated international sanctions.”