Ah! Kraken Sanctions Hearing Turns Into Screaming Match

The Kraken Cryptocurrency exchange was supposed to have its sanctions hearing today, but it turned into an explosive spectacle as the former head of security accused Kraken CEO Jesse Powell of having zero knowledge about technology and calling him an idiot who only cares about the money.

The accusations stem from a previous violation that caused the exchange to be fined $600,000 in 2017. While his testimony was not under oath,

it was entered into evidence by the presiding judge and has put into question how honest some of Kraken’s employees can be when testifying against their employer or superior.

The Background

The attempted hearing of Kraken CEO, Jesse Powell, turned into a screaming match between US senators who were questioning him. Powell didn’t do much to assuage the situation. The hearing took place before the Senate Committee on Banking Housing and Urban Affairs.

There was supposed to be an expert witness at the event, but she never showed up. The purpose of the hearing was to review reports about how the cryptocurrency exchange handled ties with WannaCry ransomware developers.

It’s alleged that WannaCry hackers may have laundered money through transactions with Kraken accounts by abusing fiat gateways and trading pairs offered by exchanges such as Mt Gox and Bitfinex.

According to Powell, Kraken only accounts for 8% of global Bitcoin trading volume, but he declined to provide details about his customer base.

He also denied that he was fully aware of what WannaCry was or what it could potentially do. While discussing money laundering concerns, Senator Joe Kennedy asked Powell if he believed that North Korea had laundered funds through cryptocurrency exchanges and eventually onto banks such as DBS in Singapore. When Kennedy kept pressing for a yes or no answer,

Powell cited attorney-client privilege and said he couldn’t answer a question with just yes or no. This caused a great deal of commotion among members of Congress who called him out on saying they were asking questions based on classified intelligence briefings.

The Hearing

At the hearing, Steele once again testified that the site had done nothing to break sanctions law. He repeated a claim he’d made in court earlier this year that he knew of very few if any cases where authorities in the US or elsewhere requested data about Kraken customers. Meanwhile, Corallo told Dratel that he believed everyone does their banking with Kraken.

The judge ordered both men not to speak with each other during breaks and adjourned the hearing for the day.

When Steele returned to his seat, Corallo began to mock him. The two screamed insults at each other for a few minutes, with witnesses saying that it appeared as though Corallo was trying to provoke Steele. After five minutes of taunting and slandering, Steele approached Corallo.

The courtroom security team and the judge immediately separated them. Security took Corallo out of court and ejected him from the building. Dratel told his client he would not be able to attend the rest of the proceedings that day and left court with him,

apologizing profusely for what had occurred. Both appeared humiliated by their conduct during hearings earlier in 2017, but neither showed remorse today when they had a chance to do so in person. ( CoinDesk )

The Aftermath

A Kraken meeting to figure out whether the financial giant is doing things that will harm other countries turned into a screaming match between Russia and the United States.

After hours of yelling, no progress was made. Secretary of Treasury Steve Mnuchin was infuriated with Russia’s attitude at the meeting, even going so far as to accuse Russian Deputy Foreign Minister Sergei Ryabkov of flat-out lying.

By evening time, Mnuchin said: I’m going home now, hinting he will not be back tomorrow to continue negotiations.

This is not how we want these things to happen, commented a State Department spokesman on condition of anonymity.

While it’s no secret that America and Russia do not see eye to eye on many things, including Syria and Crimea, we need to find a way to resolve differences without a shouting match.

The Russian side needs to take responsibility for their actions and stop accusing us of lying. We don’t lie – at least not as they do! It’s time they learn we won’t stand for their behavior anymore. This is why we imposed sanctions on them in the first place! It’s time they take some responsibility instead of always playing the victim.

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