Kraken CEO and co-founder Jesse made headlines recently for his strongly-worded response to the New York Attorney General’s request for information on the Kraken exchange, the largest bitcoin exchange based on euro volume in the world.
The NYAG sent out a statement insisting that exchanges be more transparent, and issued 13 exchanges a 34 point questionnaire with a 2 week deadline for return. Kraken was one of those exchanges.
Powell fired back at the NYAG calling the questionnaire insulting, and stated that the startup company could not address all 34 points without diverting resources needed to fulfill their promises to customers to meet their roadmap goals on time. He refused to answer the questionnaire, suggesting that the US government make an appointment and send officials to San Francisco in person if they wanted to learn more about his business.
Powell elaborated on the decision to do this in a blog post on Sunday, stating:
“We left our cushy jobs as founders of another successful company out of an ideological motivation to build that legitimate, professional exchange which would be capable of bridging crypto with traditional financial institutions and bringing it to the mainstream. That is still our mission today.””
Powell listed the reasons for refusing to answer the questionnaire in the post, with the primary issues being that they had already provided much of the information, the request for new information would disrupt Kraken’s business, Kraken does not have New York clients, and the request essentially in Powell’s view amounted to unpaid consultancy work helping the NYAG to understand the crypto space. Powell pointed out that he would have equally refused the request had it been made from a North Korean attorney as well. The full list of reasons is as follows:
Kraken is always willing to work with regulators and law enforcement. Whether you think you have us by the balls or not, approaching us with some basic respect and having a conversation is always going to make the interaction smoother and help you get what you want faster than storming in with your “or else” list of demands.
Kraken on Regulation
Powell makes it very clear that he feels personally insulted by the request for suggesting that Kraken was in some way subservient to the NYAG in a way that a non-crypto related company would not be, and stressed that his was a legitimate business and that while scams were rampant in the crypto space, crpyo-specific regulation was not necessary to prevent cases of simple fraud. The SEC has charged a number of ICO founders with fraud recently, the co-founders of the Centra Tech ICO being a prime example.
Powell pointed out that he was willing to help the NYAG and US government understand the crypto space and was even willing to do so for free, but seemed to take real offence at what he perceived as an order handed down from what he called an “ivory tower”. He stated that customers cared about trading and security, not regulation and “conforming to Wall St.’s image of what crypto markets should be”. He has stated on a number of occasions that crypto investors need to look out for themselves and perform due diligence when investing.
His firm stance against the New York AG has divided opinions, but certainly made big waves in the crypto community and may end up prompting other exchanges to re-evaluate their options when it comes to dealing with government authorities.