On Monday, the Treasury department announced that Kraken, one of America’s largest crypto exchanges, has settled with the government and agreed to pay more than $360,000 for apparently violating America’s sanctions laws related to Iran.
The Delaware-based company failed to prevent more than 820 individuals in Iran from conducting more than $1.6 million worth of crypto transactions on its platform between October 2015 to June 2019, according to the Office of Foreign Assets Control (OFAC).
OFAC, however, assessed that Kraken’s conduct was “non-egregious and voluntarily self-disclosed,” significantly reducing the settlement it paid.
Under the agreement, the company has also signed on to spend $100,000 on ameliorating its sanctions compliance system, including by instituting an automated internet protocol address blocking system that would prevent users in Iran from accessing Kraken for crypto transactions in the future.
“[Kraken] applied its geolocation controls only at the time of onboarding and not with respect to subsequent transactional activity, despite having reason to know based on available IP address information that transactions appear to have been conducted from Iran,” OFAC said.
However, the agency lauded Kraken for remedial changes like integrating geolocation blocking into its platform to prohibit Iranians from using Kraken; improving sanctions monitoring through blockchain analytics; appointing a dedicated sanctions expert to staff; and also blocking accounts in Crimea, Donetsk and Luhansk in Ukraine.
In 2021, Kraken was also fined $1.25 million for not registering as a futures commission merchant with the Commodity Futures Trading Commission and offering margined retail commodities illegally.
