Kraken has apologized and withdrawn requests for sensitive personal information sent to customers withdrawing Monero (XMR), after co-CEO Arjun Sethi acknowledged that the exchange had improperly questioned users about how they intended to spend their cryptocurrency.
The emails asked customers who had purchased XMR with their own money to disclose their employer, source of funds and intended use of the withdrawn tokens. Kraken has since informed the affected clients that they do not need to answer the questions.
In an October 23 statement, Sethi accepted responsibility for the requests, which he described as an internal mistake rather than a regulatory requirement. He also confirmed that Monero would remain listed and available for withdrawals in jurisdictions where Kraken continues to support the asset.
Kraken Reverses Questions About Customers’ Monero Spending
The controversy emerged after customers received enhanced due diligence questionnaires following XMR purchases and withdrawals.
The requests went beyond establishing where customers obtained their money, asking for details about how they planned to use their cryptocurrency after transferring it from the exchange.
Sethi traced the decision to an internal assessment that treated a younger customer holding a substantial amount of money as a potential risk indicator. He rejected that reasoning and confirmed that no applicable rule required the additional questions.
The exchange has withdrawn the requests and contacted recipients to confirm that no further response is necessary.
Sethi also drew a distinction between verifying the origin of customer funds and attempting to monitor their spending after withdrawal.
Where your money came from is a fair question. What you do with it after it leaves is not.”
Kraken has not disclosed how many customers received the questionnaires, how long the practice continued or which jurisdictions were involved.
Standard Source-of-Funds Checks Remain in Place
Kraken will continue conducting source-of-funds verification as part of its anti-money laundering and customer due diligence procedures.
Those checks can require bank statements, employment documentation or evidence of investment income, depending on the customer’s circumstances and transaction activity.
Kraken’s compliance procedures also permit additional reviews when account behavior changes or a transaction’s size or type raises questions.
The withdrawn Monero questionnaire does not eliminate those requirements. The correction concerns the additional demands for information about how customers intend to use funds after removing them from the platform.
Customer information practices have previously attracted scrutiny at Kraken. In April, the exchange disclosed unauthorized access to customer data involving recruited insiders, followed by extortion attempts against the company.
That incident involved internal security and customer information rather than Monero withdrawal monitoring, but both cases placed Kraken’s handling of sensitive client data under examination.
Monero Remains Listed Despite Regional Restrictions
Kraken’s decision to retain Monero comes as the privacy-focused cryptocurrency continues facing restrictions across regulated trading platforms.
Monero conceals transaction amounts and participant information through its underlying cryptographic design, limiting the ability of outside observers to reconstruct payment histories.
Demand for XMR has remained significant despite exchange delistings. Earlier research into Monero activity identified continued transaction growth and increasing adoption among privacy-focused users, even as access through centralized exchanges became more restricted.
Kraken removed Monero trading and deposits for European Economic Area customers on October 31, 2024, with withdrawals ending two months later. Regional restrictions also apply in other markets, including Canada and Australia.
Sethi’s latest assurances do not reverse those existing restrictions. Monero remains supported only in eligible jurisdictions, where customers can continue purchasing and withdrawing XMR under Kraken’s standard compliance procedures.
The exchange has not announced additional restrictions, a new Monero-specific questionnaire or changes to its existing source-of-funds verification requirements.
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