Kraken has withdrawn a set of customer inquiry emails after criticism from co-CEO Arjun Sethi, who said the exchange should not be asking customers how they intend to use Monero (XMR) once the coins have left the platform. The dispute centers on customer privacy, financial compliance checks, and the limits of exchange oversight after cryptocurrency is withdrawn from an exchange.

Co-CEO Says the Emails Were Wrong

In a post on X on October 23, Sethi said customers who purchased Monero with their own money and then withdrew it received emails requesting details about their employer, the source of their funds, and what they planned to do with the coins. He said no rule required the questions and criticized the decision to flag a young customer with substantial funds.

the monero:native emails were us. they were wrong. here is what happened and what changed. what happened – clients who bought xmr with their own money and withdrew it got an email asking for employer, source of funds and what they planned to do with their coins – no rule…

— Arjun Sethi (@arjunsethi) October 24, 2026

Post: https://x.com/arjunsethi/status/2113816578441810104

Sethi confirmed that Kraken had withdrawn the requests and informed affected customers that they did not need to provide the requested information. He did not disclose how many customers received the emails or in which jurisdictions they lived. The exchange also confirmed that Monero will remain listed and available for withdrawal.

Where Exchange Compliance Ends

Sethi drew a distinction between investigating where a customer's funds come from and asking what a customer intends to do with assets after they are withdrawn. He viewed source-of-funds checks as legitimate but argued against inquiring into the intended usage of coins once they are outside Kraken.

The dispute matters because cryptocurrency exchanges routinely request information to verify customer identities, investigate transactions, and meet anti-money-laundering obligations. Customers, however, can question whether particular requests are necessary, especially when they concern activities planned after assets leave an exchange. Kraken's withdrawal of the emails resolves the immediate requests, but the number of affected customers remains undisclosed.

Kraken's Source-of-Funds Rules Remain in Place

Kraken's published policy on source of funds gives the company the ability to request information about the origin of a customer's wealth, or how the money involved in a given transaction was obtained. The requests appear to rest on anti-money-laundering requirements. Sethi's statement does not indicate that Kraken has changed its broader financial verification policy.

The exchange's published policy on requesting additional information, revised on October 1, states that there can be many reasons for a request, including routine reviews and activity on an account. Information may be requested depending on the amount and type of transaction. Under the published policy, declining to answer can lead to trading and deposit restrictions, but not to withdrawal blocks.

Customers should also note that withdrawing cryptocurrency does not automatically end an exchange's responsibility for transactions performed through its platform. The Monero-specific emails have been retracted, and customers were informed that answering was not necessary. Kraken has not cited any rule authorizing those particular requests.

Monero Availability Depends on the Region

Kraken's public trading API showed the XMR/USD market as online, and the company's status service marked Monero funding as operational when checked late Friday, October 23. That means XMR is available in supported markets, but it does not mean every customer can trade it.

Deposits and trades of Monero are restricted for customers located in the European Economic Area and the United Kingdom. Kraken's rules prohibit deposits, storage, and trading of Monero for customers in Canada and Australia. These restrictions stem from regional requirements and are unrelated to the withdrawal inquiries Sethi described. According to Kraken's Canadian notice, published on October 19, 2026, the Monero delisting in Canada is the result of a compliance requirement; the notice's update date should not be read as the date of the delisting itself.

What the Dispute Means Next

Monero includes privacy features such as ring signatures, stealth addresses, and Ring Confidential Transactions, which make transactions harder to trace than on most public blockchains, where wallet activity and transaction histories can be freely analyzed. Those same capabilities can increase the difficulty exchanges face when evaluating the risks of individual transactions.

For Monero users, the immediate outcome is the withdrawal of the disputed requests and confirmation that XMR will stay listed on Kraken. Customers should check the terms and conditions that apply in their region for deposits, custody, trading, and withdrawals of the cryptocurrency. Availability will depend on location, while requirements around the verification of funds remain unchanged.

The next development to watch is whether Kraken clarifies how the inquiries were initiated and whether its internal review procedures will change. The company has not disclosed the number of affected customers, and no further changes to its policies have been announced at this time.

Source: Tron Weekly