The US Treasury Department is investigating Bitcoin exchange Kraken as it allows users in Iran to trade cryptocurrencies on its platform. Sources reported that Kraken continues to serve users in Iran, Syria and Cuba despite the US imposing sanctions on the three countries.
Bitcoin exchange Kraken faces US Treasury investigation
As I reported by cryptokoin.com, the US Treasury Department is investigating whether Kraken violated US sanctions. Kraken has allowed users in Iran, Syria and Cuba to open accounts on its platform and trade crypto assets, according to a report released on Tuesday. In this way, it ignored government bans on doing business with the three countries.
According to the report, the Office of Foreign Assets Control has been investigating Bitcoin exchange Kraken since 2019. Also, it is likely to fine the exchange. According to the report, OFAC has turned its focus to the exchange’s relations with Iranian citizens. Sources claim that Kraken also offers services in Syria and Cuba. The report alleges that Kraken CEO Jesse Powell shared a spreadsheet in June through the company’s Slack stating that it served 1,522 customers in Iran, 149 in Syria, and 83 in Cuba.
The report alleges that Jesse Powell had previously told co-workers that the company needed to evaluate “whether it was worth the risk of failing to comply with a legal requirement.” It is also noted that Powell said breaking the law “should always be seen as an option”, without detailing whether he was referring to any particular situation. Meanwhile, Kraken was fined $1.25 million from the Commodity Futures Trading Commission in 2021 for failing to register as a futures trader.
Cryptocurrencies and sanctions
Sanctions have been a hot topic in the crypto space this year after the Russian invasion of Ukraine. The United States and other Western countries have imposed economic penalties against Russia in the hope that they will persuade President Putin to withdraw his troops. Politicians have warned that Russian oligarchs may turn to Bitcoin or other digital assets to avoid sanctions. For this reason, cryptocurrencies have been at the center of the conversations.
Following the invasion of Russia, Ukraine’s Minister of Digital Transformation Mykhailo Fedorov urged crypto exchanges to ban Russian users. Jesse Powell was one of several stock market chiefs who spoke after the calls. He also said that Kraken will not ban Russian users unless required by law.
An early Bitcoin adopter and founder of Kraken in 2011, Jesse Powell has been known for his outspoken Libertarian leanings in the past. In February, Prime Minister Justin Trudeau made the controversial decision to freeze bank accounts and track the cryptocurrency wallets of Trucker Convoy protesters. After that, Powell criticized the Canadian government. Powell tweeted after Canada changed the Canadian Terrorist Financing Act during the protests. Canada’s Ontario Securities Commission later reported the tweet to the police.
Recent events in Canada and Ukraine highlight the utility of cryptocurrencies as an unrestricted alternative to fiat money. However, leaders warn of the potential harm the asset class could cause to avoid sanctions. According to estimates, Kraken is worth around $10 billion. It most recently raised $65 million to launch its first venture fund in December 2021. Also, Powell hinted last year that the stock market could go public in 2022.
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