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It’s rough seas for crytpocurrency exchanges these days and the latest to be buffeted is one of the world’s largest, Kraken. It’s reportedly under investigation by the US Treasury Department over possible sanctions violations for letting users in Iran and elsewhere trade digital tokens, according to The New York Times.
Kraken is a private exchange valued at $11 billion co-founded by chief executive 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 the NYT‘s sources. It would be the largest crypto company to face enforcement action related to US sanctions imposed in 1979 prohibiting 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 prohibited countries. That suit was settled, but the OFAC began investigating the company the same year over accounts in Iran, along with other sanctioned countries including Syria and Cuba.
Powell allegedly posted a spreadsheet to a company Slack channel showing that Kraken had 1,522 accounts in Iran, 149 in Syria and 83 in Cuba as of last month, according to the NYT. The data supposedly came from residence information on “verified accounts.”
Kraken declined to comment to the NYT, but said that it “closely monitors compliance with sanctions laws and, as a general matter, reports to regulators even potential issues.” A Treasury spokesperson said the agency was committed to enforcing “sanctions that protect US national security,” but also gave no further details.
OFAC has previously fined other cryptocurrency exchanges over similar sanctions violations. BitGo was hit with a $98,000 fine in 2020 over 183 violations, and BitPay face a $500,000-plus fine last year for 2,102 violations.
Cryptocurrency exchanges are facing more than the usual scrutiny these days. Last year, the world’s largest crytpo exchange Binance faced a US money laundering probe for being a major destination of illicit cryptocurrency. Crypto lender Celcius is under investigation by multiple states after it froze transactions, and the Winklevoss twins’ crytpo exchange Gemini is facing lawsuits over a $36 million crypto theft.
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