On October 11, the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN) and Office of Foreign Assets Control (OFAC) announced that they have resolved charges with the cryptocurrency exchange Bittrex. The crypto exchange was charged with sanctions violations and failure to “implement effective sanctions compliance controls” between March 2014 and December 2017.
Crypto exchange Bittrex charged with U.S. sanctions violations; Washington State trading platform agrees to settlement
Washington state-based crypto asset exchange Bittrex was indicted by FinCEN and OFAC for “116,421 flagrant violations of multiple sanctions programs.” According to regulators from the U.S. Treasury Department, theviolationsresulted from transactions from “persons clearly located in the Crimean region of Ukraine, Cuba, Iran, Sudan, and Syria.” According to U.S. authorities, the crypto transactions that violated U.S. financial sanctions were worth $263.45 million.
Andrea Gacchi, director of OFAC, explained that if virtual asset service providers (VASPs) do not take advantage of strong sanctions compliance, their transactions could threaten the entire nation. Gacki said Tuesday, “If virtual currency companies fail to implement effective sanctions compliance controls, including screening of customers located in sanctioned areas, they could be a vehicle for wrongdoers to threaten the national security of the United States.”
Recently this past March, FinCEN issued a red flag regarding potential sanctions evasion via crypto assets. The year before, FinCEN charged crypto derivatives exchange Bitmex with “willful violations of the Bank Secrecy Act” and said it imposed $100 million in penalties against the exchange. The U.S. Treasury Department’s OFAC has also been busy over the past few years sanctioning crypto assets, and more recently regulators have banned the ethereal mixed application Tornado Cash.
In July 2022, OFAC was said to be investigating San Francisco-based crypto exchange Kraken, according to a report published by the New York Times (NYT) citing five people familiar with the matter. on December 30, 2020, OFACsanctioned settlementof $98,830 with Bitgo regarding violations; according to a February 18, 2022 OFAC notice, Bitpay settled with the Treasury Department and the crypto payment processoragreed to “remit $507,375 to resolve any potential civil liability.”
For transactions arising from 2014-2017, Bittrex has agreed to pay a settlement with OFAC and FinCEN for the charges and potential liability brought against VASP FinCEN has agreed to pay a settlement agreement of will credit a portion of the funds as part of the agreement.
“Bittrex has agreed to remit $29,280,829.20 for willful violations of the BSA’s AML program and SAR requirements…FinCEN has agreed to pay $24, credit for the payment of $280,829.20,” the regulatory notice discloses.
FinCEN detailed that between 2014 and 2017, Bittrex’s AML program failed to identify risk and the company failed to file a suspicious activity report (SAR) during a three-year period.” Bittrex also failed to file SARs for a significant number of transactions involving sanctioned jurisdictions.” FinCEN’s announcement concluded that the transactions included questionable transactions beyond the fact that they included sanctioned jurisdictions.
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