Kraken Records A 49% Increase In Investigations From Law Enforcement

One of the world’s largest crypto exchanges, Kraken, has recently sent out its 2019 Transparency report. This report had some interesting details about the amount of law enforcement inquiries.

It's that time again. Here's a snapshot of our Compliance team's 2019 Transparency Report. Team America still ahead with 61% of total requests, down from 66% last year. Other geos gaining fast. Trend is obvious. Costs are increasing, even in a relatively flat market. pic.twitter.com/4AMe11unoL

— Kraken Exchange (@krakenfx) January 7, 2020

The report states that the Kraken exchange has received 710 requests, or about two requests a day, in the year 2019. These requests impacted around 1222 different accounts. The report shows evidence that global governments are putting their gaze on the crypto industry, scrutinizing even more intensely than before.

Draining Kraken’s Funding

The problem cryptocurrency exchanges have with this growing trend has less to do with illegal activities on the exchange itself or attempts thereof, but rather the fact that it costs them money. The legal fees of handling all these law enforcement requests don’t care if it’s a relatively flat market or not.

The increase in scrutiny could be clearly seen when one compares Kraken’s 2018 Transparency Report to its 2019 counterpart. The reports show that there was an increase of 49% when it came to the number of requests (710 compared to last year’s 475). Of those requests, 62% managed to get Kraken to provide the requested data.

The majority of the requests came predominantly from the US authorities, with 61% of all requests being from that country. Other contributors to the number of requests are the Netherlands and Great Britain.

Need For Increased Vigilance

Wirex, another crypto exchange, has reported even higher growth in queries from law enforcement in 2019. The exchange’s Chief Compliance Officer, Micheal Moore, claims that Wirex has received more than twice the amount of requests when compared to 2018. Moore attributes this to the fact that the company itself has grown during this time, as well.

As a result, the customer base would rise, causing more eyes to fall on the exchange. Moore considers this increase in law enforcement requests as nothing more than a confirmation that the industry as a whole must adhere to compliance regulations and remain vigilant in their exchanges.

Dark Side of “Free Markets”

Furthermore, Moore told the public about illegal ventures made by “disreputable individuals and organizations” that specifically target the fintech industry. Fraudsters and money launderers are two of the most prolific examples of this case.

Through these factors, Moore says that Wirex can justify its continuous efforts to create a proper, secure infrastructure on its exchange platform. Moore considers this a way to make sure that the company has provisions for scenarios, both known and unknown.