Centralized crypto exchanges (CEXs) have been taking a beating recently, with crypto winter taking its toll and platforms like FTX misusing client funds, resulting in continued contagion such as BlockFi filing for bankruptcy — the list goes on.

Facing its own trials and tribulations has been the crypto exchange Kraken, which just recently settled with the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC).

The settlement comes regarding once-alleged and now-apparent violations of sanctions against Iran. According to an official document from the department, Kraken has paid a fine of $362,158.70 USD.

“Due to Kraken’s failure to timely implement appropriate geolocation tools, including an automated internet protocol address blocking system, Kraken exported services to users who appeared to be in Iran when they engaged in virtual currency transactions on Kraken’s platform,” wrote the Treasury Department in the same letter.

According to the New York Times, the exchange had been under investigation by the OFAC since 2019, for allowing users in Iran and elsewhere to buy and sell digital tokens.

From approximately October 14, 2015, to June 29, 2019, Kraken is reported by the agency to have processed 826 transactions, totaling approximately $1,680,577 USD, for users who appeared to have been located in Iran.

“Kraken is pleased to have resolved this matter, which we discovered, voluntarily self-reported, and swiftly corrected,” Kraken’s Chief Legal Officer Marco Santori shared in an email to Decrypt.

Citing a failure to exercise “due caution,” or “care for its sanction compliance obligations,” the OFAC wrote that ”[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.”

Fortunately for Kraken, regulatory scrutiny seems to be its only setback at the moment and has so far appeared to be unaffected by the fallout and contagion of FTX.

The exchange’s CEO, Jesse Powell has taken the opportunity to share more on the importance of cryptographically verifiable proof of reserves, and how his platform is and has been implementing them.

2/2 #ProofOfReserves audit must have:
1. sum of client liabilities (auditor must exclude negative balances)
2. user-verifiable cryptographic proof that each account was included in the sum
3. signatures proving that the custodian has control of the walletshttps://t.co/QEZo0DzJfw

— Jesse Powell (@jespow) November 22, 2022

In other news, learn more about the FTX implosion and how it could lead to a regulatory silver lining.