It is currently under investigation by the Treasury Department whether the Kraken crypto exchange offered users in Iran the opportunity to buy and sell digital tokens. As a result of allowing customers to buy and sell digital tokens in Iran and elsewhere, the company is suspected of violating U.S. sanctions.
Regulators Come Into Play
Kraken has been under investigation by the Office of Foreign Assets Control at the Treasury Department since 2019, and a fine is expected to be imposed on the company. Among the largest U.S. cryptocurrency firms, Kraken would be the fifth largest to be investigated by the Office of Foreign Assets Control.
The U.S. government imposed sanctions against Iran in 1979, which forbids people or entities in the country from purchasing goods or services.
As the market for digital currencies has grown, as well as the government’s crackdown on crypto companies that are lightly regulated, the government has increasingly taken action against them.
Earlier this month, the Commodity Futures Trading Commission fined Tether, the largest U.S. crypto exchange and one of the largest stablecoin companies, for misstatements it made about the reserves of its coins. The Justice Department also sued an ex-employee of Coinbase over insider trading.
Marco Santori, Kraken’s chief legal officer, said:
“Kraken closely monitors compliance with sanctions laws and, as a general matter, reports to regulators even potential issues.”
Similarly, a Treasury spokeswoman stated the agency had no confirmation or comment on any potential or ongoing investigations and that it was committed to preventing the proliferation of weapons of mass destruction and protecting the national security of the country.
An issue connected to sanctions and Kraken was raised in a lawsuit filed in November 2019 by Nathan Peter Runyon, who was a former employee of the finance department of the company.
He claimed that Kraken was generating revenue through accounts in countries that were subject to sanctions. The chief financial officer at Kraken, as well as the top compliance official at the company, was contacted about the matter in early 2019, he stated.
The spreadsheet that Mr. Powell posted to a companywide Slack channel last month revealed that Kraken continues to service accounts in countries under sanctions, such as Iran, even as of last month.
The spreadsheet was designed to show where Kraken’s customers are located. The data that was gathered is based on information that has been provided by verified accounts regarding residence information.
Based on the spreadsheet, Kraken had 1,522 users with a residential address in Iran, 149 users with a residence in Syria, and 83 users with a residence in Cuba, according to figures viewed by The Times.
It is also estimated that the company has more than 2.5 million customers in the United States and more than 500,000 customers in the U.K. It didn’t take long for most employees to be unable to access the spreadsheet.
