Kraken will negotiate with countries banned by the US

Cryptocurrency exchange Kraken is under investigation for non-compliance with sanctions against Iran. Syria and Cuba also came under US sanctions. In fact, several users who are citizens of these countries have verified accounts on the American crypto exchange.

Kraken will have users in countries prohibited by US law

According to The New York Times, the US Office of Foreign Assets Control recently launched an investigation into Kraken’s sanctions violations. The agency is looking into whether users from sanctioned countries are allowed to buy and sell cryptocurrencies on the platform.

Kraken has just been honored by the US Office of Foreign Assets Control (OFAC). The agency, which reports to the US Treasury Department, is investigating whether Kraken allows users in countries subject to sanctions to buy and sell cryptocurrencies, according to sources cited by The New York Times. So far, neither Kraken nor the US Treasury have confirmed the investigation.

Kraken’s general counsel, Marco Suntory, said the company is not commenting on the ongoing regulator case. On the contrary, he argued that the exchange is playing its part: “Kraken is closely monitoring enforcement of sanctions laws and usually warns regulators even of potential problems. »

The investigation began in 2019, according to the New York Times, citing “five people associated with the company or with knowledge of the matter.” The sources cited believe that the US government may fine a cryptocurrency exchange that is used to legal problems. In 2021, the US Commodity Futures Trading Commission (CFTC) sued Kraken and imposed a massive fine of $1.25 million.

The Office of Foreign Assets Control (OFAC) actually considers the platform a US company. Therefore, distribution of certain lists of countries is not allowed.

These sanctions are not new, they began in 1979 when tensions between the US and Iran erupted. The situation was triggered by a hostage crisis at the US Embassy in Tehran that lasted 444 days.

Cryptocurrencies worry the powerful…

Lawmakers seem increasingly concerned about the role that cryptocurrencies could play in sanctions evasion. Some regulators believe that cryptocurrencies can mitigate the effects of sanctions, which requires more careful monitoring.

The government has even called on cryptocurrency exchanges to ban users from countries that are subject to sanctions, including Russia. Platforms such as Binance, which closed the accounts of several high-ranking Russian officials, followed the rules. Others are more rebellious, such as Kraken refusing to close user accounts.

Kraken CEO Jesse Powell has spoken out against such moves. Early in the Russian invasion of Ukraine, when his company was arranging a $10 million donation for Ukrainian clients, he objected to restrictions on Russian citizens:

“Also, if we were to voluntarily freeze the accounts of people in countries that unjustly attack and cause violence around the world, the first step would be to freeze all American accounts. »

While cryptocurrencies were originally stateless and apolitical, their growing popularity has placed them at the center of geopolitical discussions. This then led to debates in which the ideology of each opposed the action to be taken.

To conclude, we also learned a few hours ago that Coinbase is under investigation by the SEC for illegal trading in unregistered securities, it has been an extremely challenging week in the legal and regulatory space.

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