Crypto Exchange Kraken Reportedly Under Investigation for Violation of Sanctions
Kraken is among the world’s largest cryptocurrency exchanges currently undergoing a federal investigation. The crypto exchange has been suspected of violating US sanctions by allowing users in Iran to trade cryptocurrencies.
This alleged breach was discovered through five people associated with the company or with knowledge of the inquiry. This investigation is being conducted by the US Treasury Department’s Office of Foreign Assets Control.
Currently, these investigations are ongoing and it is aimed at finding out whether these sanctioned countries were allowed to buy and sell cryptocurrencies. The Treasury Department planned to impose a fine against the exchange, but it has not proposed a timeline for enforcement.
The US Commodity Futures Trading Commission (CFTC) had accused the crypto exchange platform in 2021 by imposing a fine of $1.25 million. Kraken is a private crypto exchange valued at $11 billion and co-founded by CEO Jesse Powell in 2011.
Research on the crypto exchange has been ongoing since 2019
The Treasury Department’s Office of Foreign Assets Control (OAFC) has been investigating the company since 2019. This could also amount to a fine.
That would make Kraken one of the largest crypto companies to witness enforcement-related actions against US sanctions imposed in 1979 that banned the export of goods and services to Iran.
Not only this, the Treasury is now investigating whether Kraken had traded with accounts based in Syria, Cuba and Iran.
Kraken’s former employee had reported that the crypto exchange had allegedly monetized users in the above countries.
Jesse Powell also reportedly posted a spreadsheet to a company Slack channel that revealed Kraken has 1,522 accounts in Iran, 149 in Syria and 83 in Cuba as of last month.
This data was allegedly released from residential information on “verified accounts”.
Kraken has not agreed to comment further, but it said that,
Closely monitors compliance with sanctions laws and reports as a general matter to regulators, even potential problems.
A Treasury Department spokesperson also mentioned that the agency was committed to enforcing “sanctions that protect the national security of the United States,” but nothing else was disclosed.
Related Reading | Binance Under Fire: Report says it circumvented sanctions and continued to serve Iranian customers
Increased scrutiny of crypto exchanges
The scrutiny of crypto exchanges in recent times has shot up. Many platforms have made sure to actively block Iranian users. For example, NFT trading site OpenSea had blocked Iranian users in the earlier months of 2022.
Treasury has also proactively fined crypto companies in the past. BitGo, also an exchange, was fined. Along with that, BitPay, a transaction processor was also fined for allegedly violating sanctions. Recently, Binance reportedly continued to serve its Irish users by allowing trading to take place despite sanctions and a company ban from operating in Iran.
This scrutiny has increased due to the recent downturn in the crypto market which has caused damage to these digital asset exchanges. Voyager Digital and Celsius Network have also failed to stay afloat in the market.
Related Reading | Coinbase and Kraken Promote ‘Fake Bitcoin’, Craig Wright Lawsuit Says
Featured image from LeapRate, chart from TradingView.com
