Kraken under investigation for allegedly violating US sanctions against Iran
Cryptocurrency exchange Kraken is under federal investigation for potentially violating US sanctions by allowing users in Iran and other places to buy and sell digital tokens, the New York Times reported, citing sources familiar with the matter.
Five people with knowledge of the case or exchange connections told the New York Times that Kraken is a suspect allowing customers in Iran and other sanctioned nations to use the exchange despite public calls forbidding companies to do so. The report stated that the sources asked that their identities remain anonymous for fear of retaliation.
The United States has maintained economic sanctions against Iran since 1979, and this means that companies based in the United States cannot do business with Iran or buy/sell goods to anyone in the country.
According to the report, the US Treasury Department’s Office of Foreign Assets Control has been investigating Kraken since 2019 and is expected to fine the exchange. However, the regulator has not set a timeline for enforcement action.
Speaking about the development, Kraken Chief Legal Officer Marco Santori said the exchange would not comment on “specific discussions with regulators.” The executive further stated: “Kraken has robust compliance measures in place and continues to expand its compliance team to match business growth. Kraken closely monitors compliance with sanctions laws and reports to regulators itself potential issues”.
Several crypto platforms have proactively blocked platform access to users in Iran and North Korea, among many others, in the face of a growing debate about international sanctions.
In March, the world’s largest NFT marketplace, OpenSea, blocked Iranian users from its platform as it enforced US sanctions against Iran. Last November, Ethereum software powerhouse ConsenSys blocked Iranian students from accessing online programming courses.
Enforcement actions on crypto
In the past, the US Treasury Department has charged several crypto firms for their alleged role in facilitating transactions that violate federal sanctions. In December 2020, the Treasury fined digital asset platform BitGo $99,000 for violating several sanctions programs. Last February, the Treasury reached a $507,375 settlement with digital currency platform BitPay for alleged sanctions violations.
Kraken was also previously identified as one of the few crypto exchanges that avoided an outright ban on Russian accounts. Kraken’s CEO and co-founder, Jesse Powell, was recently put under the spotlight for his willingness to challenge regulations he considers unfair, including international sanctions.
In March, Powell said his exchange complied with the legal sanctions’ requirements, but admitted that arbitrary bans were unfair to average Russians, who may not support the country’s invasion of Ukraine.
In May of last year, the IRS, whose parent organization is the US Treasury Department, ordered Kraken through court intervention to reveal the identity of users who have traded cryptocurrency on the exchange.
While In September of last year, the US Commodity Futures Trading Commission (CFTC) charged Kraken with a penalty worth $1.25 million for listing illegal trades in digital assets off-exchange and failing to register as required by law.
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