- Kraken has agreed a settlement with OFAC over the serving of users in Iran, a sanctioned country
- Kraken will pay over $362,000 and invest $100,000 in compliance controls
- OFAC found that the exchange had facilitated $1.68 million in such transactions between 2015 and 2019
Crypto exchange Kraken has reached a deal with the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) over allowing users in sanctioned countries to use its platform. OFAC reported yesterday that the exchange agreed to pay over $362,000 to settle a potential civil liability for apparent violations of sanctions against Iran, while also agreeing to invest an additional $100,000 into certain compliance controls. The case dates back to 2019 when Kraken’s use by users in sanctioned countries was first brought to light.
$1.68 Million in Illegal Trades
OFAC alleged that Kraken processed 826 transactions, totaling approximately $1.68 million, between October 2015 and June 2019 on behalf of individuals who appeared to have been located in Iran at the time of the transactions. Being a sanctioned country, this was technically in contravention of U.S. law.
The agency noted that although Kraken maintained controls intended to prevent users from initially opening an account while in a jurisdiction subject to sanctions, at the time of the transactions it did not implement IP address blocking on transactional activity across its platform. This allowed these individuals to access their accounts from inside Iran while being registered to countries outside it.
Allegations Surfaced in Runyon Lawsuit
These violations first came to light in a November 2019 lawsuit filed by a former Kraken employee, Nathan Runyon, who 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.
OFAC called the offences “a non-egregious case” and handed the exchange a fine of $362,158.70, while also ensuring that Kraken was taking satisfactory steps to mitigate against future infractions.
