Cryptocurrency exchange Kraken has withdrawn information requests sent to customers who purchased and withdrew Monero (XMR), after co-CEO Arjun Sethi publicly acknowledged that the exchange had gone too far in questioning what customers planned to do with their coins.
In a statement posted on X, Sethi said affected customers were asked about their employer, source of funds and intended use of their cryptocurrency after withdrawal. He said no rule required those particular requests and that customers had been informed they did not need to respond.
A MONERO WITHDRAWAL BECAME A COMPLIANCE QUESTION
According to Sethi, the episode began when a young customer holding a substantial amount of money was treated as a red flag. That assessment led to intrusive questions directed at customers who had bought Monero with their own funds and moved it off the exchange.
The emails did not stop at asking where the money came from. They also asked customers what they intended to do with their XMR after withdrawal. Sethi rejected the premise that being young and holding significant assets was itself suspicious.
Kraken has not established publicly how many customers received these emails or how long the requests were being sent.
KRAKEN'S CO-CEO RESPONDS
Sethi took responsibility in a public X post, explaining what happened and what had changed. His original statement is embedded below.
The XMR emails were us. They were wrong. Here is what happened and what changed.
— Arjun Sethi (@arjunsethi) View original statement on X
Sethi confirmed that the requests were withdrawn and that affected customers were told no further information was required. He also said questions about how customers planned to use their coins after withdrawal were unacceptable.
WHERE DOES EXCHANGE COMPLIANCE END?
Regulated cryptocurrency exchanges have obligations involving customer identification, anti-money-laundering controls and suspicious activity. Depending on the circumstances, those obligations may include verifying the source of funds.
But Sethi drew a distinction between asking where money originated and demanding explanations of what its owner plans to do with cryptocurrency after it leaves the platform.
Kraken's reversal does not mean it has abandoned standard compliance checks. It means the exchange withdrew these particular requests and rejected the reasoning behind them.
MONERO REMAINS LISTED — WHERE AVAILABLE
Sethi also said Monero would remain listed on Kraken. That assurance applies where the exchange offers XMR; it does not undo restrictions already in place in some jurisdictions.
THE BIGGER FINANCIAL PRIVACY QUESTION
Monero is designed to protect transaction privacy by concealing details that are publicly visible on many other blockchains. For users who choose XMR for financial privacy, being asked to explain their future spending after withdrawing coins strikes at the purpose of self-custody.
Kraken's decision does not settle the legal limits of exchange information requests. It does, however, mark a rare public acknowledgment by a major trading platform that its own scrutiny of customers went too far.
The distinction matters: verifying where money came from is not the same as demanding to know what its owner intends to do with it next.