Kraken Pays $362,000 To Settle U.S. Sanctions Violations

The cryptocurrency exchange Kraken has agreed to pay a $362,000 settlement fee to resolve claims that it violated sanctions against Iran, according to a statement released by the U.S. Treasury Department on November 28.

The Office of Foreign Assets Control, or OFAC, looked into Kraken, one of the biggest cryptocurrency exchanges, in July 2022. In the end, it turned out that Kraken supplied customers from Iran and other countries that were under sanctions.

Five people “involved with the company or with knowledge of the investigation” were used in the investigation when it started in 2019, according to the New York Times. After an investigation, Kraken has over 1,500 Iranian users as of June 2022.

There were 149 users in Syria and 83 in Cuba who could also access the cryptocurrency exchange. Since 1979, the sanctions imposed on Iran prohibit exporting products or services to establishments or individuals in the country.

Syria and Cuba are also on the list of restricted nations. Business with or service to the countries mentioned above is prohibited and is subject to penalties. According to OFAC, Kraken failed to ban users from sanctioned countries by failing to establish mechanisms that can identify users’ IP addresses and geolocations.

The settlement is the most recent development in the Treasury’s campaign against cryptocurrencies. Bittrex Inc. paid the Treasury about $30 million in October to resolve disputes involving sanctions and anti-money laundering laws.

As a condition of the settlement, Kraken will contribute $100,000 to controls over sanctions compliance. It will also control including technology and training initiatives to help with sanctions screening.

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Around six months before the settlement, Kraken lost its top global compliance officer, Steven Christie, to competing cryptocurrency exchange Binance.

Regulations bodies and Kraken have had a contentious relationship. The US-based exchange received a $1.25 million fine for engaging in unauthorized trading last year. The penalty comes as other bitcoin businesses work to earn back user confidence after FTX’s implosion.