Cryptocurrency exchange Kraken has agreed to pay the penalty to settle civil liability related to apparent violations of sanctions on Iran. As part of the deal with OFAC, Kraken would pay more than $360,000 with a specific $100,000 add-on.
U.S. regulators continue to crack down on cryptocurrency exchanges that violate regulations both within the borders and internationally.
Kraken battles OFAC
Kraken, one of the largest crypto exchanges, is currently dealing with these issues. In July 2022, the United States Treasury Department’s Office of Foreign Assets Control, or OFAC, investigated Kraken. It alleged that Kraken served Iranian customers and other sanctioned countries.
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/ @yaffebellanyhttps://t.co/BixJm2lm9g
— Ryan Mac ?? (@RMac18) July 26, 2022
The inquiry started as early as 2019. The New York Times “five people affiliated with the company or with knowledge of the inquiry.” These individuals said that the U.S. government might impose a fine on the exchange, which has already faced off with other regulatory authorities in the country.
According to the report, more than 1,500 users with residences in Iran had accounts at Kraken as of June 2022. While 149 users in Syria and 83 in Cuba were also reportedly able to access the crypto exchange.
The United States has imposed sanctions on Iran that prohibit the export of goods or services to businesses and individuals in the country since 1979. Cuba and Syria, too, were a part of this sanctioned list. Doing business or offering services to the mentioned countries would trigger penalties.
Settling the feud
OFAC has now settled with the Delaware-incorporated virtual currency exchange. In a Nov. 28 , Kraken agreed to ‘remit $362,158.70 to settle its potential civil liability for apparent violations of sanctions against Iran.’
As part of its settlement with OFAC, Kraken also has agreed to invest an additional $100,000 in certain sanctions compliance controls.’
OFAC added:
“Due to Kraken’s failure to timely implement appropriate geolocation tools, including an automated internet protocol (IP) address blocking system, Kraken exported services to users who appeared to be in Iran when they engaged in virtual currency transactions on Kraken’s platform.”
The crypto exchange platform has had a problematic relationship with the regulatory boards. Last year, The U.S.-based cryptocurrency exchange received $1.25 million in fines for illegal trading activities.