The US Office of Foreign Assets Control (OFAC) has made it clear that it will continue to fine cryptocurrency exchanges for alleged violations of the US sanctions regime. This time it was the turn of Kraken, one of the oldest cryptocurrency exchanges in the United States. Who will be next?
Kraken, a well-known US cryptocurrency exchange, has agreed to pay a fine of more than $362,000 to the US Treasury’s Office of Foreign Affairs Oversight (OFAC) for “apparently” violating US sanctions against the Iranian people.
According to the OFAC release, Kraken has agreed to “settle its potential civil liability,” which could come along with potential violations of sanctions regimes and deals with Iran.
In addition, the exchange agreed to “invest” $100,000 in some additional sanctions compliance controls, including training its staff and implementing technical controls to help detect sanctions.
Kraken processes more than $1.6 million in Iranian user transactions
Despite having a sanctions compliance and anti-money laundering program in place, Kraken processed 826 transactions, totaling approximately $1,680,577.10, on behalf of users who “appeared” to be located in Iran. Cryptopotato first reported on the SEC’s investigation into the exchange in June 2022.
These transactions took place between October 14, 2015, and June 29, 2019. This means that regulators are doing a thorough job with the exchange’s transaction history to avoid possible evasion of US sanctions.
According to OFAC, Kraken has committed 826 “apparent violations” of the Iran Transactions and Sanctions Regulations, 31 CFR § 560.204.
Kraken could have been fined $272 million.
Kraken implemented the automatic blocking of IP addresses associated with Iran and several other blockchain monitoring and analysis tools after realizing the issues and reporting them to regulators.
Thanks to its commitment to resolve the issue and its admission of guilt, Kraken avoided paying a maximum fine of more than $272 million.
In doing so, Kraken joins the list of exchanges being fined by OFAC, including Bitgo with $98,000; BitPay for more than $500,000; and Bittrex, which agreed to pay OFAC and FinCEN more than $53 million for alleged violations of its sanctions programs.
Follow the law and criticize it when necessary
Jesse Powell, the former CEO of Kraken, has been very vocal about his libertarian views, participating in discussions and even taking action when he deemed it relevant. For example, he refused to comply with the Ukrainian government’s demand to block Russian users.
He also moved Kraken’s headquarters away from New York in 2018 when the notorious BitLicense made it difficult for the exchange to operate properly. Powell had strong words for the government at the time when he criticized the law and all its requirements:
“To serve New York today, what we need to do is create a special purpose unit to serve New York only.”
This settlement brings to an end a controversial chapter in Kraken’s history. The exchange is now quite clear in terms of regulatory obligations with the United States.
Kraken’s Post to Settle with SEC, Pay $362,000 for Violating US Sanctions Against Iran appeared first on CryptoPotato.