Kraken Investigated for Allegedly Servicing Crypto Traders in Iran: Report

San Francisco-based cryptocurrency exchange Kraken has reportedly been subject to a Treasury Department investigation since 2019


Blockworks Exclusive art by Axel Rangel


key takeaways

  • A leaked internal document reportedly showed Kraken serviced 1,522 users with residences in Iran as of June
  • It also had users in Syria and Cuba — both of which are sanctioned by the US

Cryptocurrency exchange Kraken is reportedly under federal investigation for allegedly allowing users in Iran to trade digital assets in violation of US sanctions.

The exchange has been under investigation by the Treasury Department’s Office of Foreign Assets (OFAC) since 2019 and could face a penalty, the New York Times (NYT) reported on Tuesday, citing five sources familiar with the matter.

Sanctions against Iran have been a recurrent feature of US policy for over three decades. Former President Donald Trump reimposed sanctions in 2018 after withdrawing from the Iran nuclear deal, which he claimed failed to limit the country’s missile program. These sanctions meant US businesses with trade links in Iran would have to wind down operations.

Marco Santori, chief legal officer at Kraken, said the San Francisco-based crypto exchange doesn’t comment on specific discussions with regulators and is expanding its compliance team to match its business growth.

“Kraken closely monitors compliance with sanctions laws and, as a general matter, reports to regulators even potential issues,” he told Blockworks via email. The Treasury unit reportedly investigating Kraken didn’t return Blockworks’ request for comment by press time.

Separately, the US has imposed sanctions on certain Russian individuals over its war with Ukraine. But there is no legal requirement to restrict crypto companies from entirely banning access to accounts. Kraken CEO Jesse Powell said in March that total bans would be unfair to Russians, calling such a move a “pretty extreme measure.”

NYT reported that Kraken still serviced users in countries under sanctions, including Iran, as of June, citing a spreadsheet Powell posted to a company Slack channel. 

Powell’s spreadsheet — which soon became inaccessible to many employees — showed Kraken had 1,522 users in Iran. The firm had 149 users in Syria and 83 in Cuba, both of which are also under US sanctions. The document reportedly showed over 2.5 million users in the US and over 500,000 in the UK.

Kraken not alone in facing allegations of servicing sanctioned countries

Growing scrutiny of cryptocurrency firms has been playing out as the blockchain industry goes through one of the most difficult periods in its short history.

Factors include an uncertain macroeconomic environment, diminishing risk appetite after the collapse of TerraUSD (UST) and the knock-on effects on crypto lenders like Celsius and Voyager. Going forward, industry commentators expect to see the crypto regulatory landscape accelerate.

Reuters reported earlier this month that Binance violated US sanctions by allowing Iran-based customers to trade on its platform. Chagri Poyraz, Binance’s global head of sanctions, said the company did block access to traders in Iran but users may have been able to bypass restrictions via Virtual Private Networks (VPNs).

Kraken, which was reportedly seeking a valuation over $10 billion earlier this year, has previously faced enforcement actions, although not for defying US sanctions. In September 2021, the Commodity Futures Trading Commission issued a $1.25 million penalty against the exchange over an alleged illegal offering. 

Start your day with top crypto insights from David Canellis and Katherine Ross. Subscribe to the Empire newsletter.

Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. Subscribe to the On the Margin newsletter.

The Lightspeed newsletter is all things Solana, in your inbox, every day. Subscribe to daily Solana news from Jack Kubinec and Jeff Albus.


Upcoming Events

Salt Lake City, UT

MON - TUES, OCT. 7 - 8, 2024

Blockworks and Bankless in collaboration with buidlbox are excited to announce the second installment of the Permissionless Hackathon – taking place October 7-8 in Salt Lake City, Utah. We’ve partnered with buidlbox to bring together the brightest minds in crypto for […]

Salt Lake City, UT

WED - FRI, OCTOBER 9 - 11, 2024

Pack your bags, anon — we’re heading west! Join us in the beautiful Salt Lake City for the third installment of Permissionless. Come for the alpha, stay for the fresh air. Permissionless III promises unforgettable panels, killer networking opportunities, and mountains […]

recent research



Aerodrome is a "MetaDEX" that combines elements of various DEX primitives such as Uniswap V2 and V3, Curve, Convex, and Votium. Since its launch on Base, it has become the largest protocol by TVL with more than $495B in value locked, doubling Uniswap's Base deployment.


If we tokenize all assets in a speculative rush, the risk of creating illiquid markets and trapped value will manifest on a large scale


Plus, Trump is headed to the heart of Bitcoinlandia with a speaking appearance at the Bitcoin 2024 conference


Meanwhile, stocks rally after Jerome Powell finishes his Capitol Hill tour


Plus, Blinks have reshaped many people’s understanding of what blockchains are capable of


Franklin Templeton has the lowest intended ETH fund fee so far, though a similar advantage did not help it win the race for bitcoin ETF assets


It’s now time for the entire Bitcoin community to recognize that Satoshi’s design transcends the confines of a single chain