US Authorities Crack Down on Kraken for Alleged Sanctions Violations 

By Evan Spicer

Director of Cryptocurrency Investigations

Kraken, a digital asset exchange, is the latest crypto company to come under government scrutiny. The U.S. Treasury is investigating the Kraken exchange for allegedly allowing customers located in countries hit with U.S. sanctions to buy, sell and trade cryptocurrencies. 

Since the Russian invasion of Ukraine that began in late February, the U.S. government has turned its attention to blockchain transactions which create an escape route around strict sanctions. However, concerns about the Kraken crypto exchange preceded the conflict and have been ongoing since 2019. 

According to a report, the Kraken exchange was not only aware of the illegal transactions but also tried to conceal them and didn’t take sufficient steps to prevent them from recurring. After a thorough Kraken exchange review, if the government finds that it was culpable, the Kraken exchange will most likely pay a hefty fine for violating sanctions laws. 

In a similar 2021 case, BitPay was required to settle sanctions violations with a fine of over $500,000. However, Kraken may be facing a higher fine given its alleged knowledge of the activities and attempt to conceal them. 

Kraken CEO Cries Foul Over Crypto Investigations

Kraken Digital Asset Exchange CEO Jesse Powell has been vocal in his criticism of crypto investigations. Although much of this critique wasn’t concerning the Kraken exchange, Powell did state that he felt restrictions on the Tornado Cash crypto mixing services were a violation of privacy and added that he believed it was unconstitutional. 

The Kraken CEO told Bloomberg, “Having a digital currency that’s so controlled and able to be controlled maybe constitutional government action and is a bit scary too.” Powell predicts that the restrictions on Tornado Cash will be challenged in court. This may or may not imply that he may plan to challenge the validity of fines on his own company if the Kraken exchange is found to have violated sanctions. 

How the Kraken Exchange Case Can Make Crypto Transactions Safer

Although some crypto enthusiasts, such as the Kraken digital asset exchange CEO Jesse Powell, feel that investigations and regulations on crypto services are at odds with the right to privacy, it’s a fact that regulations are necessary for safe roads, and drinking water, and financial services. 

The Kraken exchange boasts of having a license from FinCENen in the U.S and FINTRAC in Canada, and presumably does believe in oversight for its services, at least when it comes to reassuring customers on its website. 

The steps taken in the months after the crypto crash to improve regulation and oversight of crypto platforms like the Kraken exchange may be one factor in the reduction of crypto fraud. Just as bank accounts are insured and subject to government regulations to ensure customer safety, crypto platforms can benefit from accountability and transparency.

MyChargeBack Will Investigate Your Crypto Case

If you have lost money on the blockchain through unregulated brokers, bitcoin wallet hacking, or fake merchants, talk to the MyChargeBack team. Our crypto investigations will provide evidence to bolster your claim. 

MyChargeBack has developed working relationships with law enforcement agencies worldwide, has extensive knowledge and experience with crypto tracking, and can improve your prospects of getting your funds back.