Kraken refuses to pay criminals who threatened to leak videos of insider data access

Numerous security issues and growing international tensions have put the crypto industry on edge.

Law enforcement agencies throughout the world are attempting to recover digital assets worth billions of dollars that have been stolen, while a major exchange is fighting an internal extortion effort.

Kraken, a cryptocurrency exchange based in San Francisco, has admitted that two of its support staff members were found to have obtained customer data without authorization, and that a criminal group then tried to use that information to shut down the company.

The attackers threatened to broadcast the films to news outlets and share them on social media if the exchange failed to provide money.

In a post on X, Nick Percoco, Chief Security Officer at Kraken, discussed the matter and described how both incidents were found and dealt with.

The first was discovered in February 2025 when a support team member’s access was promptly terminated after the company received a tip regarding a film that was making the rounds on a criminal online forum.

Another employee was fired after a second video appeared more recently.

Regarding the degree of exposure, Percoco stated on X:

“Across both incidents, only a very small number of client accounts were potentially viewed, approximately 2,000 in total (0.02% of clients).”

He also added

“Systems were never breached; funds were never at risk; we will not pay these criminals; we will not ever negotiate with bad actors.”

Kraken stated that in order to find the culprits, it is collaborating with cybersecurity experts and federal law enforcement in a number of nations.

The business reported that this type of operation, in which thieves attempt to recruit or coerce workers at telecoms, gaming platforms, and cryptocurrency companies, is becoming increasingly prevalent throughout the sector.

Global crackdown on crypto theft gains ground

Globally, law enforcement is making strides against bitcoin theft. Large-scale cryptocurrency fraud was the target of Operation Atlantic, a coordinated effort by US, UK, and Canadian agencies.

Over $45 million in stolen money was found during the operation, and about $12 million of it was frozen.

The week-long effort focused on a tactic known as approval phishing, which is used in so-called “pig butchering” scams.

In these schemes, victims are manipulated into handing over full control of their crypto wallets to scammers.

Investigators identified more than 20,000 compromised wallet addresses spread across 30 countries and took down over 120 fake websites used in the scams.

Separately, the US government announced the seizure of more than $14 billion in Bitcoin tied to a criminal network based in Cambodia.

Geopolitical tensions drag Bitcoin below $70,000

Even if those victories are noteworthy, events outside of the cryptocurrency space have been hurting the overall market.

Following the collapse of peace talks between the United States and Iran in Islamabad, Pakistan, Bitcoin plunged below $70,000. Investors were alarmed by the breakdown, which led to a sell-off that destroyed almost $350 million in long bets.

Tensions rose further when President Donald Trump threatened to block the Strait of Hormuz, a move that sent Bitcoin down 3% in just two hours.

Adding to the pressure, the US Consumer Price Index climbed to 3.3% in March.

Some analysts warn that if the conflict deepens, inflation could hit 4%, which would likely push the Federal Reserve to hold off on cutting interest rates.

Oil prices have also climbed to $84 per barrel, adding to the gloomy outlook. A recovery in crypto markets, experts say, will depend on a ceasefire, oil prices falling back below $80, and better economic figures coming through.

For now, big investors are sitting on their hands, with money flowing into Bitcoin exchange-traded funds largely stalled.

The combination of high-stakes geopolitics and insider exploitation shows that the biggest weaknesses in cryptocurrency are still human-centric rather than solely algorithmic.

Bitcoin’s price stability is now linked to both network security and international diplomacy as it increasingly resembles traditional macro assets.

Don’t just read crypto news. Understand it. Subscribe to our newsletter. It's free.