One of the biggest cryptocurrency exchanges in the world, Kraken, is presently the subject of a government investigation. It has been alleged that the cryptocurrency exchange broke American sanctions by enabling users in Iran to trade cryptocurrencies.
Five persons who were connected to the business or had knowledge of the investigation found this claimed violation. The Office of Foreign Assets Control of the United States Treasury is conducting this inquiry.
These investigations, which aim to determine if these sanctioned nations were allowed to acquire and trade bitcoins, are now under way. The Treasury Department intended to punish the exchange, but it hasn’t yet offered a timetable for taking enforcement action.
In 2021, the U.S. Commodity Futures Trading Commission (CFTC) fined the cryptocurrency trading platform $1.25 million after filing accusations against it. Chief Executive Jesse Powell co-founded Kraken, a private cryptocurrency exchange, in 2011. The exchange is valued at $11 billion.
Since 2019, the cryptocurrency exchange has been under investigation
Since 2019, the Office of Foreign Assets Control (OAFC) of the Treasury Department has been looking into the business. It can potentially result in a fine.
If US sanctions implemented in 1979 that forbade the export of goods and services to Iran were enforced, Kraken would rank among the greatest cryptocurrency companies.
In addition to this, the Treasury is currently looking at whether Kraken conducted business with accounts headquartered in Syria, Cuba, and Iran.
An ex-employee of Kraken said that the cryptocurrency exchange has allegedly been profiting from consumers in the aforementioned nations.
Additionally, according to Jesse Powell, a spreadsheet revealed that as of the previous month, Kraken had 1,522 accounts in Iran, 149 in Syria, and 83 in Cuba.
This information purportedly came from home addresses on “confirmed accounts.”
Kraken stated that, although it has declined to make any comments,
Closely monitors compliance with sanctions laws and, as a general matter, reports to regulators even potential issues.
Additionally, a Treasury representative stated that the organization was dedicated to upholding “sanctions that defend US national security,” but no other information was provided.
Greater Inspection of Crypto Exchanges
Recently, scrutiny on cryptocurrency exchanges has increased dramatically. Iranian users are aggressively blocked on several platforms. For instance, in the first few months of 2022, the NFT trading platform OpenSea has prohibited Iranian customers.
The Treasury has already imposed preemptive fines on cryptocurrency enterprises. BitGo, another exchange, was penalized. Additionally, BitPay, a transaction processor, was penalized for allegedly breaking sanctions. According to recent reports, despite recent restrictions and a firm prohibition from operating in Iran, Binance apparently continues to support Iranian users by enabling transactions.
This scrutiny has grown as a result of the recent decline in the cryptocurrency market, which has hurt these exchanges for digital assets. Additionally, Celsius Network and Voyager Digital have failed to survive in the industry.