Crypto exchange Kraken has withdrawn intrusive compliance demands sent to Monero customers after its co-CEO admitted the requests were unjustified.
On Oct. 24, Arjun Sethi said that customers who purchased and withdrew Monero (XMR) had received emails requesting information about their employers, sources of funds, and intended use of the cryptocurrency.
He acknowledged that no regulation required the disputed requests and confirmed that affected customers no longer needed to respond.
The reversal followed criticism of the exchange’s treatment of Monero users, particularly its decision to classify a young customer holding substantial funds as suspicious.
Sethi rejected that assessment, arguing that a customer’s age and financial position should not automatically trigger heightened scrutiny.
“Someone saw a young client with a lot of money and called it a red flag. That is not a red flag. That is our customer and client,” he said.
The admission raises questions about how cryptocurrency exchanges apply internal compliance controls to privacy-focused assets, particularly when those measures exceed explicit regulatory requirements.
Kraken withdraws disputed Monero questionnaires
Sethi’s statement distinguished between verifying the origin of customers’ funds and questioning how they intend to use cryptocurrency after withdrawing it from an exchange.
He said:
“Where your money came from is a fair question. What you do with it after it leaves is not.”
He called the latter inquiry unacceptable and confirmed Kraken will remove it from its compliance procedures.
Under its existing compliance policy, Kraken may request bank statements, investment records, and other documentation establishing how customers acquired their money or accumulated their wealth.
These checks support the exchange’s anti-money-laundering obligations, which require financial institutions to assess suspicious transactions and, when appropriate, verify customer information.
A separate policy updated on Oct. 1 allows Kraken to seek additional documentation following routine account reviews or changes in transaction activity, including unusually large transfers.
Customers who fail to comply with legitimate information requests may face restrictions on deposits or trading while Kraken reviews their accounts. Kraken says those information-request restrictions do not affect withdrawals.
The distinction is particularly consequential for Monero, whose privacy-preserving technology obscures transaction amounts and addresses, making its blockchain more difficult to monitor than transparent networks such as Bitcoin.
On Oct. 31, 2024, Kraken discontinued XMR trading and deposits for EEA clients, citing regulatory changes. Customers had until Dec. 31, 2024 to withdraw their holdings before the exchange automatically converted remaining balances into Bitcoin.
Sethi’s latest statement does not reverse those regional restrictions, although he reiterated the exchange’s commitment to supporting Monero wherever it remains available.
Individual Monero customers still face a rolling 30-day withdrawal cap
Despite withdrawing the questionnaires, Kraken continues to impose cryptocurrency-specific transaction limits that restrict how much Monero customers can transfer into private wallets.
According to the exchange’s published funding policy, rolling 30-day transaction limits introduced on Aug. 15, 2026 cap individual XMR deposits at $3,500 and withdrawals at $1,500 over a rolling 30-day period.
Corporate accounts face higher thresholds, with deposits capped at $30,000 and withdrawals at $10,000 over the same period.
Kraken introduced the restrictions as part of its risk-based compliance controls, saying they would allow it to continue supporting Monero trading and transfers while meeting its regulatory obligations.
The limits are substantially tighter than Kraken’s general cryptocurrency funding allowances, which vary according to account verification, residency, transaction activity, and other factors.
Sethi did not address these restrictions when announcing the withdrawal of the questionnaires.
Instead, he reaffirmed Kraken’s commitment to the cryptocurrency, saying:
“XMR stays listed. Buy it here, take it home. That is the product.”
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