Digital Asset Firm Kraken Releases Latest Transparency Report

In an effort to lead the industry in “trust” and “transparency” on their mission to accelerate the adoption of cryptocurrency, Kraken is pleased to release its 2022 Transparency Report.

The 2022 Transparency Report “provides a summary of how they protect their clients’ privacy and financial freedom while complying with the legal requests they regularly receive from agencies around the globe.”

From an NFT marketplace to a professional trading interface, Kraken offers “a variety of crypto products and services to over 9 million clients in 190 different countries.”

Last year, Kraken received data requests “from law enforcement and government agencies located in over 60 different countries.” While these requesting agencies were spread across the federal, state, and local levels, “most of the requests received were from law enforcement agencies.”

Kraken receives “all types of legal demands for information including subpoenas, summonses, court orders, and other statutory requests.” Kraken has “implemented strict policies and procedures to protect client privacy, which are meticulously followed before any client data is produced.”

Kraken provides data when they “have a legal obligation to comply with the demand.” It is important to note that failure to comply when they “have a legal obligation to do so can result in civil or criminal penalties against Kraken.”

Key Takeaways:

  • Kraken received a total of 3,705 requests during the reporting period, a 51% increase over last year.
  • 71% of the requests came from outside of the U.S. for a total of 2,624 non-U.S. requests. U.S.-based requests totalled 1,081.
  • Most of the law enforcement requests came from the U.S., Germany, Great Britain, and Spain.
  • Kraken saw 79% of our U.S. requests come from law enforcement for a total of 852 requests from U.S.-based law enforcement agencies.

Fifty-one percent increase in the number of law enforcement and government requests in 2022

The number of requests received in 2022 “represented a 51% increase from the prior year.”

This continues the trend of “a steadily increasing volume of requests we have seen over the past several years.”

To illustrate, the year over year percentage “increase from 2019 compared to 2022 is over 420%.”

Despite the tremendous increase in requests, Kraken continues “to emphasize the protection of their clients’ data through our adherence to robust policies and careful observance of legal obligations.”

In order to meet the requests of these agencies in an efficient and professional manner, they continue “to expand and strengthen our compliance program.”

Over the past year, they expanded their Compliance Team headcount “by 55% in order to meet the demands of the global network of agencies requesting information from Kraken.”

Kraken’s Compliance Team “consists of seasoned AML professionals, attorneys, former law enforcement officers, ACAMS certified analysts, and many other professionals with cryptocurrency related accreditations.”

The team works to ensure Kraken “conducts appropriate investigations and monitoring for our clients and the industry.”

As has been the case for the past several years, U.S.-based agencies “continue to issue the most requests.”

U.S. requests (1,081) accounted “for approximately 29% of the requests received by Kraken. The other top requesting countries in sequential order were Germany (784), Great Britain (385), Spain (272), and France (251).”

These five countries also “issued the most requests in 2021.”

As noted in the update:

“Of all of the 60+ law enforcement and government agencies making requests, the FBI consistently has issued the most requests for the past several years. They continued this trend again in 2022. The FBI requests represent approximately 31% (332) of the U.S. based agencies’ requests. The next two leading U.S.-based agencies were the DHS-ICE (145) and the DEA (109).”

David Zacks, Senior Director of Compliance at Kraken, stated:

“For 2023, Kraken is reaffirming our commitment to working alongside law enforcement and government agencies in order to weed out criminals and bad actors in this space. Nevertheless, we are equally committed to providing the best service possible for our clients, as we work to safeguard their funds and privacy. This years Transparency Report once again offers a deeper level of clarity into how Kraken executes on our mission to accelerate the adoption of cryptocurrencies, while also protecting the financial freedom of our clients across our various products and services.”

Even with the significant increase in the volume of requests, and law enforcement and government agencies’ increased scrutiny of the cryptocurrency industry, Kraken will “continue to work diligently to protect our clients’ privacy while still responding to the many law enforcement and government requests we receive.”

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