The US Treasury is investigating Kraken for enabling crypto trading in sanctioned countries

It’s rough seas for crytpocurrency exchanges these days and the latest to be buffeted is one of the world’s largest, Kraken. It’s reportedly under investigation by the US Treasury Department over possible sanctions violations for letting users in Iran and elsewhere trade digital tokens, according to The New York Times. 

Kraken is a private exchange valued at $11 billion co-founded by chief executive Jesse Powell in 2011. The Treasury Department’s Office of Foreign Assets Control (OFAC) has been investigating the company since 2019 and may impose a fine, according to the NYT‘s sources. It would be the largest crypto company to face enforcement action related to US sanctions imposed in 1979 prohibiting the export of goods or services to Iran.

Sanctions issues at Kraken first came up in November 2019 when an employee sued the company for doing business with prohibited countries. That suit was settled, but the OFAC began investigating the company the same year over accounts in Iran, along with other sanctioned countries including Syria and Cuba.

Powell allegedly posted a spreadsheet to a company Slack channel showing that Kraken had 1,522 accounts in Iran, 149 in Syria and 83 in Cuba as of last month, according to the NYT. The data supposedly came from residence information on “verified accounts.” 

Kraken declined to comment to the NYT, but said that it “closely monitors compliance with sanctions laws and, as a general matter, reports to regulators even potential issues.” A Treasury spokesperson said the agency was committed to enforcing “sanctions that protect US national security,” but also gave no further details. 

OFAC has previously fined other cryptocurrency exchanges over similar sanctions violations. BitGo was hit with a $98,000 fine in 2020 over 183 violations, and BitPay face a $500,000-plus fine last year for 2,102 violations.

Cryptocurrency exchanges are facing more than the usual scrutiny these days. Last year, the world’s largest crytpo exchange Binance faced a US money laundering probe for being a major destination of illicit cryptocurrency. Crypto lender Celcius is under investigation by multiple states after it froze transactions, and the Winklevoss twins’ crytpo exchange Gemini is facing lawsuits over a $36 million crypto theft. 

‘Star Wars: Knights of the Old Republic’ remake is indefinitely delayed

You might not get to play the PlayStation 5 remake of Star Wars: Knights of the Old Republic anytime soon: According to Bloomberg, its development has been delayed indefinitely. Sony announced that Aspyr Media, a company known for creating ports out of existing video games, was remaking BioWare’s classic Star Wars RPG last year. Aspyr had been working on the remake for three years by then and had industry veterans, as well as people who helped create the original game, onboard. Things certainly looked promising, but now the game’s future seems uncertain. 

Apparently, Aspyr finished a demo of the game to show Lucasfilm and Sony on June 30th and the developers were even excited by what they’ve achieved. A week later, however, the company fired design director Brad Prince and art director Jason Minor. On his LinkedIn page, Minor’s Aspyr credit shows his end of employment as July 2022, and his profile image currently features the “#Opentowork” frame.

Aspyr reportedly held a series of meetings in July about the situation to tell employees that the demo wasn’t where they wanted it to be and that the project would be put on hold. The studio heads also told staff members that the company will be looking for new contracts and development opportunities. 

While the developer’s reasons for firing Prince and Minor and for freezing the project aren’t clear at this point, one of Bloomberg’s sources suggested that it poured a disproportionate amount of time and money into creating the demo. If that’s the case, continuing what it’s been doing for the rest of the game wouldn’t be sustainable. Bloomberg says another possible point of contention is the game’s timeline. Aspyr has been telling partners that the game would be released by the end of 2022, but 2025 would be a more realistic target.

Some Aspyr personnel now believe that Saber Interactive, which has been doing outsourced work for the project, could now take over. We reached out to the company for a response to Bloomberg’s report and will edit this post with any information it may provide. To note, company released Star Wars: Knights of the Old Republic II for the Nintendo Switch back in June. The game went out with a bug that prevented people from finishing it, but Aspyr rolled out a patch to fix the issue in July.

TikTok owner ByteDance reportedly pushed pro-China messages in defunct news app

ByteDance, TikTok’s parent company based in China, used its now-defunct news app called TopBuzz to spread pro-China messages, according to BuzzFeed News. Former employees who worked at the English-language news aggregator told the publication that ByteDance ordered staff members to “pin” content that showed China in a positive light or content that promoted the country to the top of the app. They were even reportedly required to provide proof, such as screenshots of the live content, to show that they had complied with the company’s orders. TopBuzz managed to reach 40 million monthly active users by 2018.

The content the former employees helped promote included panda videos, along with videos endorsing travel to China. At least one staff member also remember pinning a video featuring a white man talking about the benefits of moving his startup to the country. As one of the former employees put it, the content ByteDance wanted them to promote wasn’t anything overtly political and took more of a soft sell approach. However, they added: “Let’s be real, this was not something you could say no to.” 

In addition to promoting pro-China content, former staff members claimed that TopBuzz had a review system that would flag reports on the Chinese government for removal. They said the flagged content included coverage of Hong Kong protests, pieces that mention President Xi Jinping and even those that reference Winnie the Pooh. Some employees also said that content depicting openly LGBTQ+ people were removed at times.

A ByteDance spokesperson denied the former employees’ claims and called them “false and ridiculous.” In a statement sent to BuzzFeed, they said:

“The claim that TopBuzz — which was discontinued years ago — pinned pro-Chinese government content to the top of the app or worked to promote it is false and ridiculous. TopBuzz had over two dozen top tier US and UK media publishing partners, including BuzzFeed, which clearly did not find anything of concern when performing due diligence.”

While TopBuzz was shut down back in June 2020, TikTok is very much alive and well. Authorities and critics have long been worried that ByteDance would use TikTok to spread pro-China propaganda in the US, and we’re guessing that these new claims won’t be assuaging anybody’s fears. Another BuzzFeed News report published in June shed light on how ByteDance employees in China had repeatedly accessed private information on TikTok users in the US. The company quickly migrated US user traffic to a new Oracle Cloud Infrastructure, but FCC commissioner Brendan Carr called on Apple and Google to ban the app “for its pattern of surreptitious data practices” anyway.

CNN’s Brian Stelter previously asked TikTok’s head of public policy for the Americas, Michael Beckerman, on whether the app could be used to influence politics and culture in the US. Beckerman replied that TikTok is “not the go-to place for politics” and that “the primary thing that people are coming and using TikTok for is entertainment and joyful and fun content.” As BuzzFeed News notes, though, a lot of young people now use TikTok as their primary source of information, including politics and breaking news.