Cointime

Download App
iOS & Android

Kraken Settles With the SEC and Pays $362K for Violating U.S Sanctions on Iran

The U.S. Office of Foreign Assets Control (OFAC) has made it clear that it will keep imposing fines on cryptocurrency exchanges for alleged violations of the U.S. sanctions system. This time it was the turn of Kraken, one of the oldest crypto exchanges in the U.S. Who will be next?

Kraken, a well-known American crypto exchange, agreed to pay a fine of more than $362,000 to the Treasury Department’s Office of Foreign Assets Control (OFAC) for “apparently” violating U.S. 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 Transactions and Sanctions Regulations.

In addition, the exchange agreed to “invest” $100,000 in certain additional sanctions compliance controls, including training its staff and implementing technical controls to assist in sanctions detection.

Kraken Processes Over $1.6 Million in Iranian User Transactions

Despite having a sanction 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 about the SEC investigations on the exchange back in June of 2022.

These transactions were conducted between October 14, 2015, and June 29, 2019. This means that regulators are doing a thorough job on the exchanges’ transaction history to avoid any possible evasion of U.S. sanctions.

According to OFAC, Kraken incurred 826 “apparent violations” of the Iranian Transactions and Sanctions Regulations, 31 C.F.R. § 560.204.

Kraken Could Have Faced a Fine of $272 Million.

Kraken implemented automatic blocking of I.P. addresses linked to Iran and multiple other blockchain monitoring and analysis tools after realizing the problems it was incurring and informing regulatory authorities.

Thanks to its commitment to resolving the problem and its acceptance of guilt, Kraken avoided paying a maximum fine amounting to 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.

Comply 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 considered it to be pertinent. For example, he refused to comply with a demand from the Ukrainian government to block Russian users.

He also moved Kraken’s HQs away from New York in 2018 when the infamous BitLicense made it difficult for the exchange to operate properly. Powell had strong words against the government back then when he criticized the law and all the requirements it contained:

“To service New York today, what we’d have to do is create a special purpose entity just to service New York”

This settlement puts an end to a controversial chapter of Kraken’s history. The exchange is now fully clear in terms of regulatory obligations with the United States.

Comments

All Comments

Recommended for you

  • On-chain indexing service Subsquid completes financing of US$17.5 million, with participation from DFG and others

    Subsquid, a chain indexing service, announced the completion of a $6.3 million financing through the CoinList community. As of now, its total financing amount has reached $17.5 million, with participation from DFG, Hypersphere, Zee Prime, Blockchange, and Lattice. It is reported that its native token, SQD, is scheduled to be listed this Friday. The Subsquid SDK has been integrated with Google BigQuery, allowing developers to use Google's technology to analyze blockchain data and reduce the data costs of large-scale deployment in the blockchain and developer communities.

  • Optimism 2024 Q1 Report: The implementation of EIP-4844 reduces L1 submission costs by 99%

    Optimism has released its Q1 2024 report, which shows that the number of daily active addresses has reached 89,000 (a 23% increase compared to the previous period), and the daily transaction volume has increased to 470,000 (a 39% increase compared to the previous period). These indicators are slightly lower than the historical high point in Q3 2023.

  • US Secret Service seizes domain used to run cryptocurrency scam

    On May 17th, the US Secret Service seized a domain used for cryptocurrency trust fraud in a "pig-killing plate" scam. In the "pig-killing plate" scam, scammers contact victims through various means, including dating apps, social media websites, and even random text messages disguised as wrong numbers.

  • Peaq Completes $20 Million Fundraising via CoinList Launch

    Peaq, a Layer1 blockchain applicable for DePIN and machine RWA, announced on X platform that it raised $20 million through its native token Launch, which was launched on CoinList from May 9 to May 16. As of now, over 145,000 community members have completed over-subscriptions of over $36 million. The new funds will be used to accelerate the growth of the peqosystem and further consolidate various ecosystem and community plans.

  • LocalMonero to Shut Down in Six Months Amid Regulatory Pressure and Internal Factors

    LocalMonero, a peer-to-peer exchange for trading privacy coin Monero (XMR), has disabled all trades and will be taken down in six months, according to parent company AgoraDesk. The company cited a combination of internal and external factors for the decision, but did not provide specifics. The move follows a trend of P2P crypto trading platforms shutting down due to regulatory challenges, including LocalBitcoins and Paxful. LocalMonero's closure also comes amid pressure from regulatory authorities on privacy coins, with exchanges including Binance and Coinbase delisting tokens like Monero and Zcash.

  • French securities regulator issues new warning to Bybit

    The French securities regulator has issued a new warning to the cryptocurrency exchange Bybit, urging customers to make arrangements for the possibility that the platform may suddenly stop providing services to French customers. The Financial Markets Authority (AMF) stated in a notice on Thursday that the exchange is not registered as a Digital Asset Service Provider (DASP), and therefore is providing services illegally in France. Bybit has been blacklisted by the AMF since May 20, 2022 for illegal operations.

  • Gaming platform Param Labs completes $7 million financing, led by Animoca Brands

    Gaming platform Param Labs has completed a $7 million financing round, led by Animoca Brands with participation from Delphi Ventures and Cypher Capital. Param Labs aims to establish a gaming ecosystem managed by its native PARAM token, which is set to launch soon. The company's first game, "Kiraverse," is a multiplayer shooting game that allows players to earn money while playing.

  • Blockchain SaaS solution AfriDex completes $5 million Pre-Seed round of financing, led by Endeavor Ventures

    AfriDex, a blockchain software-as-a-service solution based in London, UK, announced the completion of a $5 million Pre-Seed round of financing with Endeavor Ventures leading the investment and African Crops Limited, Oldenburg Vineyards, and Hank Oberoi participating. AfriDex is currently focused on the agricultural market, providing comprehensive on-chain solutions to support and protect supply chain participants, utilizing blockchain technology to achieve traceability, frictionless payments, anti-fraud transactions, verified authentication, simplified tax and subsidy management. (finsmes)

  • Rugpull occurs on Ethereum with fake NOT tokens

    PeckShield has monitored that the fake token Notcoin (NOT) on Ethereum has dropped 100%. An address starting with 0xE0eB sold 1,645,040,633,338,481.95 NOT and exchanged it for 93.5 WETH (valued at $281,000 USD). Note: Rugpull tokens have the same name as legitimate tokens.

  • U.S. senators propose spending $32 billion to develop AI and build safeguards around it

    A bipartisan group of four senators led by Chuck Schumer, the leader of the majority party in the United States, has proposed that Congress spend at least $32 billion over the next three years to develop artificial intelligence (AI) and establish safeguards around it.