Crypto Exchange Kraken settles allegations of sanctions violations

Key Takeaways:

  • The US Treasury Department’s Office of Foreign Assets Control has entered into an agreement with cryptocurrency exchange Kraken over having served Iranian customers despite U.S sanctions.
  • Kraken has agreed to pay $362,159 to rest its liability exposure for sanctions violations in the United States.

The US Treasury Department announced Monday that cryptocurrency exchange Kraken has consented to pay more than $362,000 to resolve accusations that it breached US sanctions against Iran.

Kraken outsourced services to users who seemed to to be in Iran when they were involved in virtual currency transactions on Kraken’s platform due to Kraken’s failings to promptly and accurately develop proper geolocation techniques, including an automated internet protocol (IP) address blocking framework.

The sum of the settlement demonstrates OFAC’s commitment that Kraken’s perceptible infringements were minor and “voluntarily disclosed“.

Kraken kept an anti-money laundering and sanctions compliance programme in place, which included customer screening during onboarding.

Despite these safeguards, Kraken processed 826 transactions totaling nearly $1,680,577.10 between roughly October 14, 2015 and June 29, 2019.

As a result of the settlement contract, Kraken will invest $100,000 in sanctions compliance controls, which will consist of technical and training initiatives.

Since 1979, the United States has enacted sanctions on Iran, prohibiting the export of goods and services to Iranian individuals and companies.

However, Kraken is alleged to have broken these restrictions since 2019 by enabling Iranian residents to open Kraken accounts and use them to buy and sell cryptocurrency.

Account holders who created their accounts beyond the sanctioned jurisdictions have seemed to have retrieved their accounts and transacted on Kraken’s platform from a sanctioned jurisdiction, according to IP address data.

Even before entering into this resolution, Kraken had taken a series of steps to bolster our compliance measures”, noted Marco Santori, chief legal officer at Kraken.

According to the OFAC, Kraken failed to conduct due care or concern for its punitive measures compliance requirements fully knowing the exchange had international customers.

The news of the settlement comes nearly a month after Chief Operating Officer Dave Ripley took over for top executive Jesse Powell, who left after more than ten years in the position.

Aadrika Sharma
Aadrika Sharma

I enjoy writing and try to learn new things every passing day!

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