Leading cryptocurrency exchange Kraken is facing an investigation from the United States Treasury Department’s Office of Foreign Assets Control (OFAC) for reportedly violating U.S. sanctions.
According to the NY Times report, despite the United States sanctions against Iran, Syria, and Cuba, Kraken has continued to assist users to trade crypto there.
Five anonymous “affiliated with the company or with knowledge of the inquiry” sources quoted by the New York Times, reported this information about Kraken.
Kraken has been under investigation by the Office of Foreign Assets Control since 2019 and will probably be imposing a penalty on the exchange.
The report states that OFAC concentrated on the exchange’s interactions with Iranian nationals, and the sources assert that Kraken also provided services in Syria and Cuba.
As per the report, Kraken CEO Jesse Powell distributed a spreadsheet via the company’s Slack in June that showed the firm had 1,522 Iranian, 149 Syrian, and 83 Cuban clients.
Since 1979, the United States has imposed sanctions on Iran, prohibiting the export of goods and services to Iranian businesses and Iranian individuals.
Nathan Peter Runyon, a former employee of Kraken, filed a lawsuit in November 2019 accusing the firm of getting profit from accounts in nations that were subject to sanctions.
This is when the topic of sanctions and Kraken first came up. According to court documents, he claimed to have brought the issue up with Kraken’s CFO and top compliance official at the beginning of 2019, and last year, the lawsuit was resolved.
In a 2019 internal discussion about employee benefits, Powell said he would consider breaking the law in a variety of circumstances if the benefits to the business outweighed potential penalties.
A Treasury spokeswoman stated that OFAC is devoted to implementing “sanctions that protect U.S. national security” and that it “does not confirm or comment on potential or ongoing investigations.”
Marco Santori, Kraken’s chief legal officer, noted that the exchange “does not comment on specific discussions with regulators. Kraken closely monitors compliance with sanctions laws and, as a general matter, reports to regulators even potential issues.”
Following Russia’s invasion of Ukraine, sanctions have become a touchy subject in the cryptocurrency community this year. Politicians warned that Russians might use Bitcoin or other digital assets to evade sanctions.
With the crypto market expanding at an exponential rate, the regulators have been monitoring the crypto-related firms as the sector is not mildly regulated. Just last week, the U.S.DOJ charged a former Coinbase employee with insider trading.
The U.S. SEC is also investigating Coinbase over crypto listings and whether the platform allowed its clients to trade digital assets that should have been registered as securities.
