Cryptocurrency exchange Kraken is reportedly under investigation for allegedly allowing users in Iran and elsewhere to trade cryptocurrency in breach of U.S. sanctions.

The New York Times, citing people familiar with the matter, today reported that the Treasury Department’s Office of Foreign Assets Control has been investigating Kraken since 2019 and is expected to impose a fine. If a fine is imposed, it would be the largest U.S. cryptocurrency firm to face enforcement action concerning O.F.A.C. Sanctions against Iran, which have been in place since 1979.

The same report also suggests that Kraken may have intentionally breached the sanctions. In an internal conversation about employee benefits in 2019, it’s alleged that Kraken Chief Executive Officer Jesse Powell said he would consider breaking the law in a wide range of situations if the advantages to the company outweighed potential penalties.

In response to the report, Marco Santori, Kraken’s chief legal officer, said that the company “does not comment on specific discussions with regulators.” He added that “Kraken closely monitors compliance with sanctions laws and, as a general matter, reports to regulators even potential issues.” A spokesperson for the Treasury Department said the agency does not comment on potential or ongoing investigations.

The alleged breaches of sanctions are not limited to Iran as well. Kraken is also alleged to allow users to operate accounts in Syria and Cuba, countries also sanctioned.

The start of the alleged investigation in 2019 occurred around the same time a former Kraken employee Nathan Peter Runyon filed a lawsuit against the company. Runyon, a marine veteran and former financial analyst, accused Kraken of unethical and illegal business tactics, defrauding employees over their stock options, sanctions violations, discrimination against him as a disabled military veteran and faking company officer addresses.

Among Runyon’s allegations were that Kraken earned revenue from countries on the Office of Foreign Assets Control Specially Designated Nationals and Blocked Persons List.

Photo: Kraken