San Francisco-based cryptocurrency exchange Kraken is reportedly under investigation by the US Treasury Department on suspicion of allowing Iranian users to use the site’s services in violation of federal sanctions.
The Treasury Department would likely impose a fine on the exchange, although it did not suggest a timing for the executive action, The New York Times reports.
Kraken’s Chief Legal Officer Marco Santori, stated that the exchange would not comment on “specific discussions with regulators”. However, he gave the following statement to CoinDesk:
“Kraken has robust compliance measures in place and continues to grow its compliance team to match its business growth. Kraken closely monitors compliance with sanctions laws and, as a general matter, reports to regulators even potential issues.”
Meanwhile, a recent Reuters investigation found that another exchange, Binance, has continued to allow Iranian users to trade despite sanctions and a corporate ban on doing business there.
Federal sanctions have long been a tool for the US government to prevent individuals or nations from accessing the global financial system. In the past, multiple users and cryptocurrency addresses in Iran have been sanctioned.
Several crypto platforms have proactively blocked Iranian users, including NFT trading platform OpenSea has blocked Iranian users earlier this year.
Meanwhile, Ethereum incubator ConsenSys has blocked Iranian students from a coding bootcamp in 2021.
The Treasury has also not been shy about slapping fines to cryptocurrency companies in the past.
Examples include cryptocurrency exchange BitGo and transaction processor, have both faced hefty treasury fines for alleged violations of sanctions.Kraken CEO and co-founder Jesse Powell spoke of his willingness to challenge regulations he considers unfair, including international sanctions.
Kraken’s CEO and co-founder, Jesse Powell, has been vocal about his willingness to challenge regulations he sees as unfair, including international sanctions.
Following the Russian invasion of Ukraine in February, Powell pushed back against calls to freeze the accounts of Kraken’s Russian users, tweeting:
“Our mission at [Kraken] is to bridge individual humans out of the legacy financial system and to bring them into the world of crypto, where arbitrary lines on maps no longer matter, where they don’t have to worry about being caught in broad, indiscriminate wealth confiscation.”
In June, the company released their culture memo where it believes that: “weaponization of the financial system is immoral” and promised to “engage in disputes with government agencies where outdated laws are unfairly exclusionary.”
Disclaimer: Cryptocurrencies are volatile in nature. None of these reports should be taken as a financial advice. Consult your financial advisor before making any investments.