Karakka is a Federation colony and a member of the Colonial Coalition. It is located exactly on the edge of Klingon territory.
The most remote colony of the Coalition, Karakka would be a completely worthless ice world were it not for the fact that it is home to some of the richest dilithium mines known in the quadrant. This makes the freighters that take the raw dilithium from Karakka to Havley's Hope for refinement tempting targets for the bandits and pirates that hide in the Shadows. The recent discovery of benamite on the planet (the crystals vital for the quantum slipstream drive, which like high warp ironically has no use in the Shoals itself) has only made the prize even greater for those who can successfully capture a shipment traveling along the route now known as Widowmaker Trail.
Karakka houses Humans, Klingons, and Romulan refugees alike in a similar fashion to Nimbus III - though this is where the comparison ends. Settlements have a predominant race of people, somewhat suffering from certain favoritism to factions. Because of it's location in relation to the Klingon border of the Shoals, there is a heavy IKS presence around Karakka than there is any other Colonial Coalition colony.