Kraken, a U.S.-based cryptocurrency exchange valued at over $11 billion, is in the Treasury Department’s Office of Foreign Assets Control (OFAC) cross-hairs and is reportedly being investigated for violating sanctions placed on Iran by the U.S. government, according to inside sources.
OFAC investigation of Kraken
The cryptocurrency exchange is one of the most liquid, enabling traders worldwide to smoothly trade a wide range of cryptocurrencies. However, latest reports indicate that the ramp might have violated one of the many sanctions placed by the U.S. government on Iran, administered through OFAC, an agency of the Treasury Department.
According to people familiar with the inquiry, OFAC has been investigating the exchange since 2019, examining their dealings with entities or individuals believed to be from Iran. Following this investigation, it is highly likely that Kraken will get a hefty fine to become one of the U.S.’s largest crypto firms to receive an enforcement action from the agency.
It is not immediately clear how the exchange will settle with OFAC. No new details have been divulged either from the exchange or the agency. However, Marco Santori, the Chief Legal Officer of Kraken, told CoinDesk that they remain compliant and have been consistently reporting to regulators.
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.
U.S. Treasury Department Sanctions on Crypto Firms
When the U.S. imposes sanctions on firms or countries, they effectively block them from accessing the global financial system. Economic sanctions placed on Iran therefore prevent U.S. companies from dealing with its citizens. Kraken, a firm compliant with U.S. rules, is on the growing list of companies investigated by U.S. authorities.
In May 2022, OFAC sanctioned Blender, a cryptocurrency mixer, saying North Korea was using the tool to support its malicious crypto cyber activities and money laundering of stolen funds. The U.S. pinned Blender as the exit point of $20.5 million of over $600 million stolen from the Ronin Network. Earlier this month, several Chinese and UAE firms were sanctioned for delivering and distributing Iranian petroleum products in East Asia.