Crypto exchange Kraken agreed to pay a fine after the SEC found it had poor oversight over the geographic location of its clients.
Kraken is fined
The US Office of Foreign Assets Control (OFAC) has made it clear that it will continue to impose fines on crypto exchanges for violations of the US sanctions system. This time it was the turn of Kraken, one of the oldest crypto exchanges in the US.
Kraken agreed to pay a fine of more than $362,000 to the Office of Foreign Assets Control (OFAC). This fine was imposed on Kraken for violating US sanctions in Iran.
The exchange says it will also invest an additional $100,000 to add additional additional checks on compliance with the relevant sanctions. An example of this is training its staff and implementing technical controls to help detect the sanctions.
Kraken processes more than $1.6 million in transactions in Iran
Despite having a sanctions compliance and anti-money laundering program, Kraken processed 826 transactions, totaling approximately $1,680,577.10, in Iran.
These transactions were conducted between October 14, 2015 and June 29, 2019. This means that regulators are working hard to prevent possible evasion of US sanctions.
According to OFAC, Kraken has committed 826 violations of Iran’s Transactions and Sanctions Regulations, 31 CFR §560.204.
A $272 million fine
Despite the fact that things didn’t go very well, Kraken did its best to comply with the sanctions. For example, Kraken blocked IP addresses linked to Iran. In addition, it also blocked multiple blockchain monitoring and analytics tools.
Thanks to its commitment to solving the problem and because it pleaded guilty, Kraken avoided paying a fine of more than $272 million.
Kraken thus joins the list of exchanges that have been fined by OFAC. These include Bitgo, which was fined $98,000; BitPay, which was fined $500,000 and Bittrex, which agreed to pay more than $53 million to the OFAC.
End of a controversial chapter
Jesse Powell, the former CEO of Kraken, often participated in debates and even took action when he saw fit. For example, he refused to comply with a demand from the Ukrainian government to block Russian users.
He moved Kraken’s headquarters away from New York in 2018. He did this when BitLicense made it difficult for the exchange to operate properly. Powell disagreed with the government at the time. He criticized the law and all its requirements:
To serve New York today, we would have to create a special entity to serve New York.
This settlement ends a controversial chapter in Kraken’s history. The exchange is now completely clear in terms of regulatory obligations with the United States.