Kraken, one of the largest crypto exchanges in the world, is reportedly under investigation by the United States Treasury Department.
The crypto exchange has allegedly allowed users in Iran and other prohibited countries to trade digital tokens.
Kraken Under Investigation
According to The New York Times, Kraken is a private exchange valued at $11 billion, co-founded by Jesse Powell, its chief executive, in 2011.
The US Treasury Department's Office of Foreign Assets Control or OFAC has been investigating the crypto company since 2019 and may impose a fine.
This is the largest crypto company to face enforcement action in relation to US sanctions imposed in 1979 prohibiting the export of goods or services to Iran and other prohibited countries.
According to Engadget, the sanctions that were issued by OFAC at Kraken first came up in 2019 when an employee sued the crypto company for doing business with prohibited countries.
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The lawsuit was eventually settled, but the OFAC began investigating the crypto company again over accounts in Iran, together with other sanctioned countries, including Syria and Cuba.
Powell had posted a spreadsheet to Slack, a company channel showing that Kraken had 1,522 accounts in Iran, 149 in Syria, and 83 in Cuba as of June. The data came from verified accounts.
Kraken has not released any comment in regards to the report in The New York Times, but the company stated that it is closely monitoring its compliance with sanctions laws and reports to regulators, even potential issues.
A spokesperson for the US Treasury said that the agency was committed to enforcing sanctions that protect the country's national security but also gave no further details.
OFAC has fined other cryptocurrency exchanges in the past over the same sanctions violations. BitGo was sanctioned with a $98,000 fine in 2020 over 183 violation, and BitPay was sanctioned $500,000 fine in 2021 for 2,102 violations.
Sanctions Against Crypto Exchanges
Cryptocurrency exchanges have faced many problems in the past few months. In 2021, Binance, the world's largest crypto exchange, had faced a money laundering probe for being the go-to of illicit cryptocurrency.
Binance is under investigation by the US Department of Justice and the Internal Revenue Service or IRS, according to Bloomberg.
Although the officials have confirmed that crypto is being used for money laundering, they have not confirmed whether they are tied to criminal violations, claiming that not all inquiries came from wrongdoings.
Binance's CEO Changpeng Zhao, was fast to defend his company, saying that the news about the transactions has painted them in a negative light.
Zhao said that Binance had collaborated with law enforcement agencies to "fight bad players," adding that the publication had made that "look like a bad thing."
However, this is not the first time the crypto exchange has been wrapped in money laundering allegations. In a report from forensics firm Chainalysis, Binance was a top destination for illicit crypto in 2019.
Aside from Binance, Celcius, one of the most famous crypto lenders, is under investigation by multiple states after it froze transactions. The Gemini crypto exchange is facing lawsuits over a $36 million crypto theft.
Related Article: Top Five Crypto Exchanges for the US Citizens
This article is owned by Tech Times
Written by Sophie Webster
