Kraken, a U.S. crypto exchange has settled with the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) and agreed to pay $362,158.70 for apparent violations of sanctions against Iran. For allegedly breaking the economic sanctions against Iran, the agency started investigating Kraken in July. The anonymous sources affiliated with the company quoted by the New York Times confirmed that the crypto exchange allows users from Iran and other sanctioned nations to utilize its network. The agency states that from October 14, 2015, to June 29, 2019, Kraken processed 826 transactions, totaling approximately $1,680,577.10, for people who were said to be in Iran at that time. The OFAC claims that despite knowing the exchange had customers all across the world, Kraken did not take reasonable precautions or care to comply with its sanctions-related requirements. For “illegally offering margined retail commodity transactions in digital assets,” including Bitcoin, and failing to register as a futures commission merchant, the Commodity Futures Trading Commission (CFTC) commanded Kraken to pay $1.25 million in penalty last year.
According to the company’s bankruptcy petition, BlockFi Inc. owes three of its biggest creditors more than $1 billion, including $30 million that is still owed to the U.S. Securities Exchange and Commission (SEC) as part of the $100 million settlement that was announced in February. BlockFi has assets and liabilities totaling between $1 billion and $10 billion, with a combined debt of $1.3 billion owed to its 50 largest creditors. The company owes Ankura Trust Company $729 million as part of its agreement with the SEC to update and register the product, and Ankura Trust Company is the trustee through whom the company manages its BlockFi Interest Accounts. BlockFi has filed for bankruptcy protection.
The company was exposed to the collapse of Terra and the excessive coin exposure of the hedge fund 3AC. In addition, it got a $400 million line of credit from FTX after Terra’s UST stablecoin failed. The company owes $275 million to parent company FTX on its revolving line of credit. After a bank run on the exchange, FTX was forced to acknowledge that it did not keep one-to-one reserves of customer funds.1 On November 11, the same day FTX filed for bankruptcy, BlockFi, which allowed users to receive yield for depositing inactive cryptocurrency on the platform, first stopped allowing withdrawals. FTX has bailed out other platforms in addition to BlockFi. After the Liquid Group experienced a $90 million hack, the cryptocurrency exchange also provided a $120 million loan to the company in August 2021. On July 6, Voyager later declared bankruptcy.
In a late-Monday press release, Silvergate Capital (SI) stated that less than $20 million of its total deposits from all digital asset customers as of Nov. 28 were related to BlockFi, which on Monday filed Chapter 11 bankruptcy protection. Silvergate in a statement said that, “BlockFi is not a custodian for Silvergate’s bitcoin-collateralized SEN Leverage loans, which to date have continued to perform as expected with zero losses and no forced liquidations. Silvergate has no investments in BlockFi,”