This Crypto Exchange Was Fined Over $360K By US Government For Allowing Crypto Transactions In Iran

Kraken, one of the top crypto exchanges by trading volume, has agreed to pay up more than $360,000 in a settlement for violating U.S. sanctions against Iran.

The exchange ​​was charged with “potential civil liability for apparent violations of sanctions” against the Middle Eastern country, the Department of Treasury said in a Monday statement. 

Kraken is a Delaware-based company that stands as the tenth largest crypto exchange in trading volume, according to CoinMarketCap, in a list topped by Binance.

What Happened: The Treasury Department said Kraken has also agreed to invest an additional $100,000 in compliance controls to avoid making the same violations again. 

The history of U.S. sanctions against Iran goes back to 1979.

Sanctions set in place by the Iranian Transactions and Sanctions Regulations prohibit the exportation, reexportation, sale, or supply of goods, technology or services to Iran.

Kraken engaged in 826 apparent violations that the company self-reported.

Between 2015 and 2019, Kraken processed transactions for a total of $1.6 million “on behalf of individuals who appeared to have been located in Iran at the time of the transactions.”

Although the company has set controls in place to avoid these types of usage by scanning the user’s IP addresses at the time of onboarding them to the platform, it did not implement IP address blocking on transactions inside Iran from accounts generated abroad.

“According to IP address data, account holders who established their accounts outside of sanctioned jurisdictions appear to have accessed their accounts and transacted on Kraken’s platform from a sanctioned jurisdiction,” according to the Treasury Department. 

The Legal Backdrop: Cryptocurrencies are often poised as the best solution for achieving a decentralized flow of global capital, without state borders or third parties getting in the way.

But the ways in which crypto is exchanged these days — mostly through third-party exchanges — continue to fall into the jurisdiction of many national territories. 

Companies in the space who want to operate legally are liable to penalties for breaking the laws of the countries where they’re based.

Shutterstock image.