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 system. This time it was Kraken’s turn, one of the oldest crypto exchanges in the US. Who will be next?
Kraken, a well-known US crypto exchange, agreed to pay a fine of more than $362,000 to the Treasury Department’s Office of Foreign Assets Control (OFAC) for “apparent” violations of US sanctions against the people of Iran.
According to the OFAC release, Kraken agreed “to settle its potential civil liability,” which could come along with possible violations of the Iranian transaction and sanctions regulations.
In addition, the exchange agreed to “invest” $100,000 in certain additional sanctions compliance controls, including staff training and implementation of technical controls to assist in the detection of sanctions.
Kraken processes over $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 investigations into the exchange in June 2022.
These transactions were carried out between October 14, 2015 and June 29, 2019. This means that regulators are doing a thorough job of the exchange’s transaction history to avoid any possible evasion of US sanctions.
According to OFAC, Kraken incurred 826 “apparent violations” of the Iran Transactions and Sanctions Regulations, 31 CFR § 560.204.
Kraken could have been fined $272 million.
Kraken implemented automatic blocking of IP addresses linked to Iran and several other blockchain monitoring and analysis tools after realizing the problems it was incurring and informing regulatory authorities.
Thanks to its commitment to fix the problem and its acceptance of guilt, Kraken avoided paying a maximum fine of more than $272 million.
Kraken thus joins the list of exchanges fined by OFAC, including Bitgo for $98,000; BitPay for more than $500,000; and Bittrex, which agreed to pay more than $53 million to OFAC and FinCEN for alleged violations of the sanctions programs.
Obeyed and criticized the law when necessary
Jesse Powell, the former CEO of Kraken, has been very vocal about his libertarian views, engaging in debates and even taking action when he deemed it relevant. For example, he refused to comply with a demand from the Ukrainian government to block Russian users.
He also moved Kraken’s headquarters away from New York in 2018 when the infamous BitLicense made it difficult for the exchange to function properly. Powell had strong words for the government when he criticized the law and all the requirements it contained:
“To serve New York today, what we have to do is create a special purpose entity just to serve New York”
This settlement puts an end to a controversial chapter in Kraken’s history. The stock exchange is now completely clear when it comes to regulatory obligations with the US.
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