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Crypto exchange Kraken could be fined by Treasury for alleged sanction violations

Crypto exchange Kraken is under investigation for allegedly allowing Iranian users access to its services.

United States Treasury Building / Image by: Wikimedia Commons

Wed, 27 Jul 2022, 12:21 pm UTC

Just weeks after crypto exchange Binance was reported to have continued to process trades by Iranian clients despite U.S. sanctions, another crypto platform is now in hot water for similar violations. Kraken is under investigation for allegedly allowing Iranian users access to its services.

Crypto exchange Kraken is reportedly under federal investigation for allegedly allowing Iranian users to buy and sell digital tokens, Reuters reported. This would mean that the exchange is in violation of federal sanctions.

The investigation is being conducted by the U.S. Treasury Department's Office of Foreign Assets Control, which has been investigating the crypto exchange since 2019. Unnamed sources said that the exchange will likely be fined for the violations but there is no timeline given for the enforcement action.

The Treasury Depart has already imposed fines on crypto companies in the past so it is highly likely that it will also do the same to Kraken. For instance, Treasury imposed fines on transaction processor BitPay for alleged sanctions violations.

In a statement sent to CoinDesk, Kraken Chief Legal Officer Marco Santori said that the company would not comment on specific discussions with regulators. However, he maintains that the platform has measures in place to ensure that compliance with various regulatory requirements is being met.

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

Earlier this month, Reuters reported that Binance, the largest crypto exchange in the world by trading volume, continued to allow Iranian clients to place trades even after the U.S. reimposed sanctions in 2018. In its interviews, some traders revealed that they were still using their Binance accounts until as recently as September 2021.

Several crypto platforms have already proactively blocked Iranian users. These include the NFT trading site OpenSea as it blocked Iranian users starting this year and Ethereum incubator ConsenSys, which blocked Iranian students from a coding boot camp in 2021.

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