The US Treasury Department is investigating Kraken for enabling crypto trading in sanctioned countries

It’s rough seas for cryptocurrency exchanges these days, and the latest to be beaten is one of the world’s biggest, Kraken. It is reportedly under investigation by the US Treasury Department over possible sanctions violations for allowing users in Iran and elsewhere to trade digital tokens, according to New York Times.

Kraken is a private exchange valued at $11 billion that was co-founded by CEO Jesse Powell in 2011. The Treasury Department’s Office of Foreign Assets Control (OFAC) has been investigating the company since 2019 and may impose a fine, according to NEWits sources. It will be the largest crypto company to face enforcement action related to US sanctions imposed in 1979 to ban the export of goods or services to Iran.

Sanctions issues at Kraken first came up in November 2019 when an employee sued the company for doing business with banned countries. The case was settled, but OFAC began investigating the company that same year over accounts in Iran, along with other sanctioned countries, including Syria and Cuba.

Powell allegedly posted a spreadsheet to a company’s Slack channel showing Kraken had 1,522 accounts in Iran, 149 in Syria and 83 in Cuba last month, according to NEW. The data should have come from residential information on “verified accounts”.

Kraken declined to comment NEW, but said it “closely monitors compliance with sanctions laws and, as a general matter, reports to regulators itself potential problems.” A Treasury Department spokesperson said the agency was committed to enforcing “sanctions that protect the national security of the United States,” but also gave no further details.

OFAC has previously fined other cryptocurrency exchanges for similar sanctions violations. BitGo was hit with a $98,000 fine in 2020 over 183 violations, and BitPay faces a $500,000-plus fine last year for 2,102 violations.

Cryptocurrency exchanges are facing more than usual scrutiny these days. Last year, the world’s largest crypto exchange Binance faced a US money laundering investigation for being a major destination for illegal cryptocurrency. Crypto lender Celcius is under investigation by several states after it froze transactions, and the Winklevoss twins’ crypto exchange Gemini is facing a lawsuit over a $36 million crypto theft.