The US Treasury Department’s Office of Foreign Assets Control (OFAC) has reached a settlement with the US–based crypto exchange Kraken over letting Iranian customers use the platform. Kraken has agreed to pay $362,159 to settle its “potential civil liability for apparent violations of sanctions against Iran”.

According to OFAC, the exchange failed to implement appropriate geolocation tools, including an automated internet protocol (IP) address blocking system, which allowed customers in Iran to make transactions on the platform.

Violated sanctions

Kraken reportedly processed 826 transactions, with a total value of approximately $1,680,577.10, for individuals who were found to have been in Iran from October 14, 2015 to June 29, 2019. The United States has imposed sanctions on Iran since 1979 to prohibit the export of goods or services to businesses and individuals. Kraken allegedly violated the sanctions by letting Iranian customers buy and sell crypto. 

Therefore, OFAC states, Kraken failed to exercise due caution or tending to its sanctions compliance obligations when knowing the exchange had customers worldwide.

“[Kraken] applied its geolocation controls only at the time of onboarding and not with respect to subsequent transactional activity, despite having reason to know based on available IP address information that transactions appear to have been conducted from Iran,” OFAC said in the settlement.

Kraken will also have to invest an additional $100,000 in sanction compliance controls as part of the agreement.

Marco Santori, chief legal officer at Kraken, told CoinDesk “Kraken is pleased to have resolved this matter, which we discovered, voluntarily self-reported and swiftly corrected.”