Kraken Violated Sanctions? Investigation begins

  • Kraken is facing an investigation from the US Treasury on the grounds of violating OFAC sanctions imposed against Iran
  • The CEO of the exchange, Jesse Powell, sent a message wherein he revealed his intentions of bypassing sanctions if it profits his company

United States-based crypto exchange platform Kraken is reportedly under investigation for allegedly providing services in sanctioned Iran.

According to a report by the New York Times, the Treasury Department is closely looking into the exchange servicing Iranian users and is expected to levy a heavy fine against Kraken.

The report says that the details of the investigation have been confirmed by five anonymous individuals associated with the exchange platform. 

The inquiry has reportedly been going on since 2019. If the allegations are proven to be accurate, this will make Kraken the largest crypto exchange to ever face OFAC enforcement action for violations of sanctions linked to Iran.

Notably, these trade sanctions were implemented in 1979, restricting the export of any product or service to Iran from the United States.

When asked, Kraken’s Chief Legal Officer Marco Santori stated that the exchange “does not comment on specific discussions with regulators.”

“Kraken closely monitors compliance with sanctions laws and, as a general matter, reports to regulators even potential issues.”

He went on to add.

The report claims that CEO Jesse Powell, who is known for his libertarian views, shared messages in 2019 which indicated that if the benefits to the business outweighed the costs of breaking the law, Kraken might do so.

Crypto sector and sanctions

Regulators around the world have swiftly become wary of the crypto industry’s potential to encourage sanctions evasion in the wake of the Canadian and Russian episodes.

Interestingly, Powell turned down the vice prime minister of Ukraine’s invitation to voluntarily stop providing services to Russian customers in March. He said in the same Twitter discussion that his company aims to connect people with crypto “where arbitrary lines on maps no longer matter.”

“Our mission at Kraken is to bridge individual humans out of the legacy financial system and bring them in to the world of crypto, where arbitrary lines on maps no longer matter, where they don’t have to worry about being caught in broad, indiscriminate wealth confiscation.”

In response to a request from the Ukrainian Vice Prime Minister Mykhailo Federov who asked exchanges to cease services in Russia, Powell stated:

Powell, on the other hand, grudgingly bowed to Canadian authorities in February when they asked him to impose sanctions against the Freedom Convoy protesters.

The International Monetary Fund issued a warning in April that Russia could utilize Bitcoin miners to circumvent sanctions. In fact, because of the potential benefits Russia could have in the industry, President Putin has expressed a genuine interest in bitcoin mining.

Parth Dubey Verified

A crypto journalist with over 3 years of experience in DeFi, NFT, metaverse, etc. Parth has worked with major media outlets in the crypto and finance world and has gained experience and expertise in crypto culture after surviving bear and bull markets over the years.

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