The US Treasury is investigating Kraken for enabling crypto trading in sanctioned countries

It’s rough seas for cryptocurrency exchanges these days, and the latest to be shaken is one of the world’s largest, Kraken. It is reportedly under investigation by the US Treasury Department for possible sanctions violations for allowing users in Iran and elsewhere to trade digital tokens The New York Times.

Kraken is an $11 billion private exchange co-founded by Chief Executive Jesse Powell in 2011. The Treasury Department’s Office of Foreign Assets Control (OFAC) has been investigating the company since 2019 and could face a fine, according to it NYT‘s sources. It would be the largest crypto company to face enforcement action related to US sanctions imposed in 1979 that ban the export of goods or services to Iran.

Sanctions issues at Kraken first surfaced in November 2019 when an employee sued the company for doing business with banned countries. That lawsuit was settled, but OFAC began investigating the company over accounts in Iran that same year, along with other sanctioned countries, including Syria and Cuba.

Powell allegedly posted a spreadsheet on a company’s Slack channel showing that Kraken had 1,522 accounts in Iran, 149 in Syria, and 83 in Cuba over the past month, according to the NYT. The data allegedly came from residency information on “verified accounts.”

Kraken declined to comment NYT, but said it “closely monitors compliance with sanctions laws and even reports potential problems to regulators in general.” A Treasury Department spokesman said the agency is seeking to enforce “sanctions to protect U.S. national security,” but gave no further details.

OFAC has previously fined other cryptocurrency exchanges for similar sanctions violations. BitGo was fined $98,000 for 183 violations in 2020, and BitPay was fined over $500,000 for 2,102 violations last year.

Cryptocurrency exchanges are subject to more than the usual scrutiny these days. Last year, the world’s largest crypto exchange, Binance, faced a US money laundering probe for being a prime target of illegal cryptocurrency. Crypto lender Celcius is under investigation by multiple states after freezing transactions, and the Winklevoss twins’ crypto exchange Gemini is facing lawsuits over a $36 million crypto theft.

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