A crypto exchange agrees to pay $360,000 for possibly violating Iran sanctions

A crypto exchange agrees to pay $360,000 for possibly violating Iran sanctions

Illustration by Alex Castro / The Verge

Cryptocurrency exchange Kraken has agreed to pay $362,158.70 to settle with the Department of the Treasury over claims that the firm violated US sanctions against Iran. Kraken, which lets users buy, sell, hold, and trade cryptocurrency, is also required to invest an extra $100,000 in certain sanctions compliance controls.

As noted in the details of the settlement, Kraken allegedly processed 826 transactions totaling over $1.68 million on behalf of customers who may have been located in Iran. The Department of the Treasury says the apparent violations took place between October 14th, 2015, and June 29th, 2019, and were “non-egregious and voluntarily self-disclosed.”

Kraken already had an existing sanctions compliance program that prevented users from signing up in sanctioned locations, but the settlement alleges Kraken “did not implement IP address blocking” on activity across its platform during this time. According to IP address data obtained by the Treasury Department, this means that some users were able to sign up for the platform in areas not subject to US sanctions, and then proceed to conduct transactions from sanctioned locations, such as Iran.

Marco Santori, Kraken’s chief legal officer, said in an emailed statement to The Verge that the firm has since implemented a number of changes, including adding geolocation blocking to prevent users from accessing the site in sanctioned locations, as well as hiring a dedicated head of sanctions. The company has also invested in sanctions compliance training for staff and implemented “blockchain analysis tools to assist with sanctions monitoring.”

The fine comes as numerous cryptocurrency firms look to regain users’ trust following the collapse of FTX, which was once the third-largest crypto exchange by volume. Since then, crypto finance firm BlockFi has filed for bankruptcy, and major crypto lender Genesis has suspended withdrawals. Several crypto companies, including Coinbase and Crypto.com, have since committed to publishing their proof of reserves in a bid to become more transparent with users.