Crypto exchange closes customer account amid Mt. Gox repayments; What’s happening? 
Cryptocurrency Jul 12, 2024 Share
The Mt. Gox Bitcoin (BTC) and Bitcoin Cash (BCH) repayments have been a major pressure point for the crypto market and community for years.
The situation turned particularly hot in the summer of 2024 as the failed BTC exchange not only began returning assets to its creditors after a decade, but drama swiftly emerged as various middlemen entities revealed there would be a substantial delay before the cryptocurrency was processed and fully returned.
Kraken, in particular, came under fire as it announced a 90-day deadline – the longest among the major crypto exchanges – to fully complete the Mt. Gox-related repayments, which some interpreted as a delay strategy.
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Bitfinex’ed, a prominent critic of various players within the crypto industry on X, went so far as to predict that Kraken would ‘freeze the larger accounts and repeatedly request KYC/AML documents which they already have, as a stalling tactic while larger traders front-run them.’
Once Kraken receives customers bitcoin from the Mtgox distribution they’re likely to freeze the larger accounts and repeatedly request KYC/AML documents which they already have, as a stalling tactic while larger traders front run them.
You’ll send in the requested information… https://t.co/nbc5RG7FEy
— Bitfinex'ed 🔥🐧 Κασσάνδρα 🏺 (@Bitfinexed) July 6, 2024
Is Kraken quietly removing accounts of Mt. Gox creditors?
The prediction apparently came true only days later as one user who selected Kraken as their repayment channel made a Reddit (NYSE: RDDT) post complaining their account was unexpectedly suspended.
According to the post, after months of smooth sailing, Kraken suddenly notified the user that their account was closed and that they should try a different username. Not only did the event take place just as Mt. Gox repayments were starting but, by the time the post was made, Kraken’s support team was very slow with resolving the issue.
Despite the alarming timing, there is no indication of the actual reason behind the account suspension and even a quick search reveals that people have had their Kraken accounts removed, also without apparent cause, for years.
Additionally, given that the user appears to be from Kazakhstan, there is a possibility their account was suspended due to sanctions targeting Russia. Corporations following a better-safe-than-sorry strategy and over-complying with sanctions is a relatively common issue in some parts of the world.
It is worth pointing out that such booting of customers is not confined to the crypto industry, and banks are continuously searching for illicit actors to suspend their accounts leading to completely innocent customers getting caught in the crossfire.
Additionally, false positives are even more likely when it comes to cryptocurrencies given thair legal and regulatory status is generally substantially less clear and prone to frequent changes.
Kraken denies any foul play
For its part, Kraken fervently denied any conspiratorial allegations to Finbold’s request for comments, stating that:
“Kraken has not closed any accounts for any reason related to the planned Mt. Gox distribution. Clients who don’t abide by our terms of service are liable to have their accounts closed. We are unable to tell individual clients why their accounts have been closed.”
Bitfinex’ed did not return Finbold’s request for comment by the time of publication.
Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
