More than 1,500 users residing in Iran reportedly had accounts on Kraken as of June, while 149 users from Syria and 83 from Cuba were also able to access the cryptocurrency exchange.
The US Treasury Department’s Office of Foreign Assets Control (OFAC) is investigating cryptocurrency exchange Kraken for allowing users from Iran and other countries to buy and sell cryptocurrencies, a possible violation of US sanctions.
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According to a Tuesday story in the New York Times, OFAC has been investigating Kraken’s alleged sanctions violations since 2019 and could be close to imposing a fine on the exchange. The United States has imposed sanctions on Iran since 1979 that prohibit the export of goods or services to companies and individuals in the country. However, the news outlet reported seeing internal messages from 2019 suggesting that Kraken CEO Jesse Powell would consider breaking the law – though he does not appear to be referring to penalties – if the benefits outweigh the potential penalties.
Kraken, one of the world’s largest crypto exchanges, is under investigation by the US Treasury Department for potentially violating sanctions by allowing accounts in Iran and other countries to buy and sell crypto. Latest w/ @yaffebellany: https://t.co/BixJm2lm9g
— Ryan Mac (@RMac18) July 26, 2022
The OFAC investigation reportedly began the same year that former Kraken employee Nathan Peter Runyon filed a lawsuit against the cryptocurrency exchange, alleging that the company had engaged in unethical and illegal business tactics, defrauded employees over stock options and had violated sanctions. According to people familiar with the matter, OFAC began investigating Kraken accounts in Iran, but some users from Syria and Cuba – countries also sanctioned by the United States at the time – also reportedly had accounts on the platform.
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According to the news, more than 1,500 users residing in Iran had accounts on Kraken as of June, while 149 users from Syria and 83 from Cuba would have also been able to access the exchange. According to the note, 6 million people have active Kraken accounts.
In a statement to Cointelegraph, Kraken’s chief legal officer, Mark Santory, said:
“Kraken does not comment on specific discussions with regulators. Kraken has strong compliance measures in place and continues to grow its compliance team to accommodate company growth. Kraken rigorously monitors compliance with sanctions laws and, as a general matter, reports regulators even from potential problems.
Following the invasion of Ukraine in February and the subsequent economic measures imposed by the United States, many policymakers they saw cryptocurrencies as a way for Russia to evade sanctions. Powell used his Twitter account on February 27 to say that Kraken would not freeze users’ cryptocurrency accounts in Russia without a legal requirement.
1/6 I understand the rationale for this request but, despite my deep respect for the Ukrainian people, @krakenfx cannot freeze the accounts of our Russian clients without a legal requirement to do so.
Russians should be aware that such a requirement could be imminent. #NYKNYC https://t.co/bMRrJzgF8N
— Jesse Powell (@jespow) February 28, 2022
Government agencies have previously taken control measures against Kraken. In September 2021, the Commodity Futures Trading Commission ordered the exchange to pay more than $1 million in civil money penalties for allegedly violating the Commodity Exchange Act by offering “margined retail commodity transactions in digital assets” to ineligible US customers between June 2020 and July 2021.
Clarification: The information and/or opinions expressed in this article do not necessarily represent the views or editorial line of Cointelegraph. The information set forth herein should not be taken as financial advice or investment recommendation. All investment and commercial movement involve risks and it is the responsibility of each person to do their due research before making an investment decision.
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