After a quick review of the questions, I've determined they are not unreasonable, nor would it take most exchanges a great deal of effort to comply; Kraken is obviously attempting to hide their activities (they have also recently stopped operations in Japan); and the questions (if answered truthfully, or untruthfully) would implicate them in the future. Yes the market will decide, and that decision may be a large sell off of Kraken assets.
RE: New York Attorney General Demands Info From Exchanges: Kraken Says NOPE / ETH Inflation To Drop 90%