US-Based Crypto Exchange Kraken Will Halt Business Operations in Japan

The US-based cryptocurrency exchange Kraken announced on Wednesday that it would stop operating in Japan by the end of the month due to the country's present market conditions and the global crypto market in general, as reported first by Reuters.

By January 31, Kraken will no longer be registered with Japan's Financial Services Agency (JFSA), at which point customers will need to withdraw their fiat and cryptocurrency assets, according to a statement from the company.

The crypto exchange stated that it is fully financed in order to ensure that all impacted clients could withdraw their money on time.

Due to the weak demand for digital assets caused by difficult market conditions, Kraken said last month that it will downsize its employment by 30%, or roughly 1,100 employees of its current workforce.

The most valuable cryptocurrency, Bitcoin, has lost about 60% of its value so far this year, while the overall cryptocurrency market has decreased by $1.4 trillion as a result of the demise of Sam Bankman-Fried's FTX, Terra's meltdown, and other factors, according to Reuters.

Kraken's Settlement Over Iran Sanctions Violation

The Department of the Treasury and Kraken recently reached an agreement in November to resolve transactions that appear to have violated US sanctions on Iran.

As a result, the massive cryptocurrency platform has agreed to pay more than $360,000.

Just like any other crypto exchanges, Kraken allows users to sell, purchase, trade, and own any of the digital assets that are available on Kraken's site.

The settlement agreement, however, reveals that hundreds of transactions worth a staggering $1.68 million were made by people located in Iran.

In fact, the crypto service forbids new users from registering in nations covered by US sanctions. It appears that the platform does adhere to the penalty program in some way.

The Department of Treasury claims that Kraken failed to apply IP address blocking while users were trading on the cryptocurrency exchange.

As a result, it appears that users who initially registered in the US may still be able to sell or buy digital assets after transferring to Iran.

The Treasury Department learned that some users had engaged in such activities based on the IP addresses of Kraken users. Some individuals did register in the US and carry on with their business there.

According to the US government agency, Kraken exported services to users who appeared to be in Iran when they carried out virtual currency transactions on Kraken's platform because it failed to implement the necessary geolocation tools in a timely manner, including an automated internet protocol (IP) address blocking system.

The transactions that took place in Iran are estimated to be worth $1.6 million. Additionally, these activities took place between October 14, 2015, and June 29, 2019, according to the Treasury.