On Tuesday, a newly released report detailed that cryptocurrency exchange Kraken is under federal investigation for allegedly violating US sanctions, according to five people familiar with the matter. The unknown sources explained that the investigation into Kraken started in 2019 and that he is accused of allowing users from sanctioned countries like Iran to access the digital currency trading platform.
Treasury’s Office of Foreign Assets Control Reportedly Investigating Kraken
The San Francisco-based crypto exchange kraken is under investigation by the US Treasury Department’s Office of Foreign Assets Control (OFAC), according to a report published by The New York Times (NYT) on July 26, 2022. Kraken founded in July 2011 by Jesse Powell is one of the oldest digital currency exchanges in the world.
The NYT report cites “five people affiliated with the company or with knowledge of the investigation.” In addition, the report also states that the anonymous sources did not want to be named “for fear of retaliation from the company.” According to the editorial summary, OFAC has been investigating Kraken since 2019 for allowing users from sanctioned countries to acquire crypto assets.
The five people familiar with the Kraken case say they expect the US government to fine the San Francisco trading platform. Kraken was fined last year when the US Commodity Futures Trading Commission (CFTC) charged the company for “illegally offering margined retail commodity transactions in digital assets”.
At that time, the CFTC withdrew $1.25 million from the San Francisco crypto firm’s parent company, Payward Ventures Inc., and told Kraken to “cease and desist further violation”. The NYT contacted Kraken and the company’s chief legal officer, Marco Santori, noted that the exchange “does not comment on specific discussions with regulators.” Santori added:
Kraken closely monitors compliance with sanctions laws and generally reports even potential issues to regulators.
Speaking to a US Treasury spokeswoman, NYT reporters said OFAC made a similar statement. “[The U.S. Treasury] does not confirm or comment on potential or ongoing investigations,” the Treasury person said. People familiar with the matter said OFAC’s investigation began in 2019 when a former employee initiated legal proceedings against Kraken and later settled the case.
The anonymous NYT sources note that OFAC began reviewing Kraken accounts around the same time and the accounts are allegedly from Iran, Syria and Cuba. The charges that Kraken is under federal investigation follow Bloomberg’s recent report that the U.S. Securities and Exchange Commission (SEC) is would have investigate Coinbase for alleged violations of unregistered securities.
Bloomberg’s report regarding Coinbase is similar to the New York Times op-ed on Kraken in that it quotes anonymous people familiar with the subject. Both publications cited people who know the subject on various occasions lately, and specifically, stories regarding bankrupt crypto lender Celsius.
What do you think of the report regarding Kraken that says the swap is under federal investigation? Let us know what you think about this topic in the comments section below.
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