Kraken Facing Investigation Over Sales to Iran

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  • Kraken is facing an OFAC investigation, according to the New York Times
  • The paper claims that Kraken is serving users in sanctioned countries
  • Iran, Syria and Cuba are among the residences of ‘verified’ users

Cryptocurrency exchange Kraken is facing an investigation into the alleged provision of services to citizens of Iran, which is banned by US sanctions rules. The New York Times reported yesterday that the exchange has been under investigation by the Treasury Department’s Office of Foreign Assets Control (OFAC) since 2019 and is expected to receive a fine when it is complete, although it isn’t likely to change founder Jesse Powell’s attitude towards his way of working.

Runyon Case Started Investigation

The New York Times says that the issue of sanctions regarding Kraken surfaced in a November 2019 lawsuit by a former employee, Nathan Runyon, who accused the exchange of generating revenue from users in countries that were under sanctions. Runyon said that he had taken the matter to Kraken’s Chief Financial Officer and top compliance official in early 2019 but that nothing was done.

Runyon’s case was settled out of court last year, while Kraken failed in a counter lawsuit against Runyon in 2020.

Iran, Syria and Cuba all Served by Kraken

The lawsuit naturally created unwanted attention for Kraken, with OFAC launching an investigation that same year, focusing on the company’s accounts in Iran, according to the Times’ sources. Users in two other sanctioned countries, Syria and Cuba, are also thought to have used Kraken for trading cryptocurrency.

Kraken owner Jesse Powell is famously opinionated and outspoken, having previously said that New York is “hostile to business” and was vocally against shutting down exchange accounts for Russian citizens following the invasion of Ukraine. It is highly likely, therefore, that an OFAC fine will not change his mind in terms of where he allows his customers to reside.