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On Tuesday, a newly published report indicated that cryptocurrency exchange Kraken is under federal investigation for allegedly violating US sanctions, according to five people familiar with the matter. The unidentified sources explained that the investigation into Kraken started in 2019, and it is accused of allowing users from sanctioned countries such as Iran to access the digital currency trading platform.
San Francisco-based crypto exchange Kraken is reportedly under investigation by the US Treasury Department’s Office of Foreign Assets Control (OFAC), according to a report published by the New York Times (NYT) on July 26, 2022. Kraken was founded in July 2011 by Jesse Powell is one of the oldest digital currency exchanges in the world.
The NYT report cites “five people associated with the company or with knowledge of the request.” Furthermore, the report also states that the anonymous sources did not want to be named “for fear of retaliation from the company.” According to the editorial summary, OFAC has been investigating Kraken since 2019 for allowing users from sanctioned countries to acquire crypto assets.
The five people familiar with the Kraken case say they expect the US government to fine the San Francisco trading platform. Kraken was hit with a fine last year when the US Commodity Futures Trading Commission (CFTC) accused the firm of “unlawfully offering margined commodity transactions in digital assets.”
At the time, the CFTC collected $1.25 million from the San Francisco crypto company’s parent company Payward Ventures Inc., and asked Kraken to “cease and desist from further violations.” The NYT contacted Kraken and the company’s legal director, Marco Santori, noted that the exchange “does not comment on specific discussions with regulators.” Santori went on to say:
Kraken closely monitors compliance with sanctions laws, and as a general matter reports to regulators itself potential problems.
Speaking with a spokeswoman for the US Treasury Department, the NYT reporters said OFAC issued a similar statement. “[The U.S. Treasury] does not confirm or comment on potential or ongoing investigations,” the Treasury Department person said. The people familiar with the matter said the OFAC investigation began in 2019 when a former employee initiated legal proceedings against Kraken and later settled the case.
The NYT’s anonymous sources note that OFAC began looking into Kraken accounts around the same time, and the accounts reportedly originated in Iran, Syria and Cuba. The allegations that claim Kraken is under federal investigation follow the recent report from Bloomberg that the US Securities and Exchange Commission (SEC) is reportedly investigating Coinbase over alleged unregistered securities violations.
Bloomberg’s report on Coinbase is similar to the New York Times editorial on Kraken, citing unnamed people familiar with the matter. Both news publications have cited people familiar with the matter on various occasions in recent times, and more specifically stories about bankrupt crypto lender Celsius.
What do you think about the report about Kraken saying that the exchange is allegedly under federal investigation? Let us know what you think about this topic in the comments section below.
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