Kraken Under US Treasury Investigation for Violating Sanctions Against Iran: Report

The investigation underscores the growing efforts by authorities to impose control over the crypto market.

By Shomik Sen Bhattacharjee | Updated: 27 July 2022 13:03 IST

Kraken Under US Treasury Investigation for Violating Sanctions Against Iran: Report

Photo Credit: Unsplash/ PiggyBank

Kraken is suspected of allowing users in Iran to use its exchange despite federal sanctions

Highlights

The inquiry started as far back as 2019
Kraken might become the largest exchange to be fined by OFAC
Lawmakers have become alert around crypto use in avoiding sanctions

US-based crypto exchange Kraken is reportedly under investigation by the US Treasury Department's Office of Foreign Control for allegedly violating economic sanctions against Iran. Kraken allegedly allowed users in Iran and elsewhere to buy and sell digital tokens, according to a media report, which cited five people with knowledge of the matter who wished to remain anonymous due to fear of retaliation. The US Treasury has been investigating the exchange since 2019 and is expected to impose a fine, the report states.

As reported by the New York Times, Kraken allowed users in Iran, Syria, and Cuba to open accounts and trade crypto assets on its platform, disregarding government bans on engaging in business with the three nations. The report claims that Kraken CEO Jesse Powell shared a spreadsheet via the company's Slack in June, indicating that it served 1,522 customers based in Iran, 149 in Syria, and 83 in Cuba.

The report claims that Powell previously said to his co-workers that the company had to assess whether it was "worth the risk to not follow the legal requirement" and that breaking the law "always has to be considered as an option" without elaborating on whether he was referring to any specific situation.

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If the allegations raised against the exchange are true, it would make Kraken the largest crypto company to face enforcement action from the Office of Foreign Assets Control (OFAC) for sanctions violations pertaining to Iran.

The US imposed sanctions on Iran in 1979 which prohibits the export of goods or services to people or entities within the country.

Responding to the report, Kraken shared a statement with CoinDesk, worded by Chief Legal Officer Marco Santori who made it clear that the exchange would not comment "on specific discussions with regulators."

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"Kraken has robust compliance measures in place and continues to grow its compliance team to match its business growth. Kraken closely monitors compliance with sanctions laws and, as a general matter, reports to regulators even potential issues," Santori added.

The reported probe of Kraken's overseas transactions highlights the growing concerns that crypto companies have been violating US laws and sanctions against countries like Iran, North Korea and Russia.

Earlier this month, Reuters reported that Binance, another major crypto marketplace, processed transactions by customers in Iran, violating a US ban.

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