The US Treasury Department is probing whether the Kraken crypto exchange has allowed users in Iran to trade in digital currencies on the platform and violated US economic sanctions, the New York Times reported.
The probe by the Treasury Department’s Office of Foreign Asset Control comes after the US Commodity Futures Trading Commission (CFTC) fined Kraken $1.25 million in September last year for “illegal off-exchange digital asset trading and failing to register as required.”
The Times report, citing sources familiar with the matter, said that Kraken is suspected of flouting US sanctions by allowing users in Iran to buy and sell digital tokens.
The US government has tightened its supervision of crypto companies lately amid hacking attacks and a falling crypto market. Currently, there is no single regulatory body for the crypto market.
Several crypto firms have recently suspended withdrawals due to the sharp fall in the prices of digital assets.
For instance, on July 4, Vauld suspended withdrawal, trading, and deposits. In a blog post, Vauld CEO Darshan Bathija said that the current market climate has led to significant customer withdrawals, amounting to over $197.7 million since June 12, 2022. When these companies tumble, the investor is left hanging in the wind, he said, adding that these companies, however, can survive by selling their shares.
The US is increasing its crackdown on crypto firms as countries like Russia and Iran could evade international sanctions by converting their money into cryptos for transactions. They funnel money into a tumbler service that makes it difficult to track the transactions on the blockchain.
However, Marco Santori, Kraken’s chief legal officer, said, "Kraken has robust compliance measures in place and continues to grow its compliance team to match its business growth.” He added that Kraken closely monitors compliance with sanctions laws and, as a general matter, reports to regulators even potential issues."
Meanwhile, Kraken has been tackling an internal conflict. CEO Jesse Powell tweeted: "I think we've developed some really thoughtful policies that might not appease woke activists but work for the other 99% of the world."
The company wrote in a blog post that “we ask that our employees respect the individual rights, privacy, and freedoms of others. Crypto is a freedom movement and Kraken will remain a freedom company.