Kraken is being investigated for allegedly violating US sanctions against Iran

According to the New York Times, Kraken is under federal investigation for potentially violating US sanctions by allowing users in Iran and elsewhere to buy and sell digital tokens.

According to five people with knowledge of the situation or exchange affiliation, Kraken is suspected of allowing customers from Iran and other sanctioned countries to use its exchange despite public calls for companies not to do so. According to the report, the sources requested that their identities be kept anonymous out of fear of retaliation.

Since 1979, the United States has maintained economic sanctions against Iran, which means that American companies cannot do business with Iran or buy/sell goods to anyone in the country.

According to the report, the Office of Foreign Assets Control at the United States Treasury Department has been investigating Kraken since 2019 and is expected to fine the exchange. The regulator, however, has not specified a timetable for the enforcement action.

Kraken Chief Legal Officer Marco Santori commented on the news, stating that the exchange would not comment “on specific discussions with regulators.” The executive went on to say: “Kraken has strong compliance measures in place and is expanding its compliance team to keep up with the company's growth. Kraken closely monitors compliance with sanctions laws and, in general, reports potential issues to regulators ”.

In the face of a growing debate over international sanctions, several crypto platforms have proactively blocked platform access to users in Iran and North Korea, among others.

When the United States imposed sanctions on Iran in March, the world's largest NFT marketplace, OpenSea, blocked Iranian users from its platform. ConsenSys, the Ethereum software powerhouse, blocked Iranian students from accessing its online programming course in November of last year.

Cryptocurrency Enforcement Actions

Previously, the US Treasury charged several crypto firms for allegedly facilitating transactions that violated federal sanctions. The Treasury fined digital asset platform BitGo $99,000 in December 2020 for violating multiple sanctions programs. The Treasury reached a $507,375 settlement with digital currency platform BitPay in February of last year for alleged sanctions violations.

Kraken was previously identified as one of the few cryptocurrency exchanges that avoided a complete ban on Russian accounts. Jesse Powell, Kraken's CEO and co-founder, has recently come under fire for his willingness to challenge unfair regulations, including international sanctions.

Powell stated in March that his exchange complied with the legal sanctions requirements, but admitted that blanket bans were unfair to ordinary Russians who might not support the country's invasion of Ukraine.

In May of last year, the IRS, whose parent organization is the US Treasury, ordered Kraken to disclose the identities of users who had been transacting in cryptocurrency on the exchange through court intervention.

In September of last year, the United States Commodity Futures Trading Commission (CFTC) fined Kraken $1.25 million for listing illegal off-exchange digital asset trading and failing to register as required by law.

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