Kraken Says Govt Inquiries Tripled Last Year
According to a Tweet posted by Kraken, the cryptocurrency exchange has received almost three times as many inquiries from government agencies last year that it did in 2017.
Increasing Law Enforcement Inquiries
According to the data that Kraken posted, the crypto exchange received 475 different inquiries related to law enforcement from government agencies across the globe in 2018 than the 170 inquiries it received in 2017.
The exchange’s data also showed that such inquiries have been increasing in the last few years, with just 71 inquiries being made in 2016. Since then, the number inquiries have only been increasing.
Of all the agencies that contacted them, the US government agencies were the ones with the most inquiries. The data revealed by Kraken stated that of the 475 inquiries last year, 315 were from various agencies of the US government.
Of these agencies, the US Homeland Security Investigations (HIS) had the largest number of inquiries at 91. The agency that issued the second highest number of subpoenas was the Federal Bureau of Investigation (FBI) wat 67, and the Drug Enforcement Administration (DEA) had the third highest number of subpoenas at 40.
In total, there were 11 different US government agencies that were looking to enforce their own regulations on the cryptocurrency industry. In contrast, there were a total of 160 inquiries from government departs from the rest of the world.
Legal Costs Impacting Crypto Related Businesses
Legally, a subpoena is an order that is issued to a person or a company to produce documents. It can also be an order to appear before a court for legal proceedings.
Subpoenas are usually used when law enforcement agencies are investigating possible cases of fraud. While this process is generally useful for the investigation, it also leaves the individuals or companies subpoenaed with a larger volume of requests as well as shorter deadlines.
The challenge that such companies face is that each subpoena requires effort in collected “petabytes of data”, which ends up being a cost to the company. And this cost is transferred to the end user.
In fact, Kraken, in its tweet, stated that this was one of the reasons why so many businesses preferred to block American users from their platforms. The exchange stated that the cost of handling so many subpoenas (translating to legal costs) was fast becoming a barrier to entry for many businesses.
Kraken also stated that only one-fifth of their customers were from the US, but the inquiries from US government agencies totaled two-thirds of all requests the crypto exchange received last year.