DOJ Files First Criminal Complaint Against US Citizen Allegedly Using Cryptocurrency to Evade Sanctions

The U.S. Department of Justice filed its first criminal complaint against an American who allegedly used cryptocurrency to circumvent U.S. sanctions. “The payment platform advertised its services as designed to circumvent U.S. sanctions, including through allegedly untraceable virtual currency transactions.”

The U.S. Department of Justice indicted a U.S. citizen in a cryptocurrency sanctions evasion case

The U.S. Justice Department has filed its first criminal complaint against a U.S. citizen who allegedly tried to circumvent U.S. sanctions by using cryptocurrency, according to a court opinion documentfiled Friday by U.S. Magistrate Judge Zia M. Farooqi. The case is still pending.

Judge Farooqi explained why he approved the U.S. Justice Department’s criminal complaint against an American citizen accused of transferring more than $10 million worth of bitcoin to a cryptocurrency exchange in a country under comprehensive sanctions. Comprehensive sanctions are currently imposed on Cuba, Iran, North Korea, Syria, and the regions of Crimea, Donetsk and Luhansk.

The U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) imposed fines on crypto-exchange platforms for violating sanctions laws. However, the judge explained:

the Department of Justice can and will prosecute individuals and entities for failure to comply with OFAC regulations, including virtual currency.

The DOJ alleged that Defendant, a U.S. citizen, used an IP address in the United States “to conspire to operate an online payment and remittance platform” located in a country subject to comprehensive sanctions. The Justice Department noted:

The payment platform advertised its services as intended to circumvent U.S. sanctions, including through allegedly untraceable virtual currency transactions.

Defendant also opened an account on a U.S. cryptocurrency exchange to buy and sell bitcoin. The defendant then used this cryptocurrency exchange account to transfer more than $10 million worth of BTC between the United States and sanctioned countries to the platform’s customers. Thus, the defendant conspired to violate the International Emergency Economic Powers Act (IEEPA) and defraud the United States, according to the U.S. Department of Justice.

The judge further noted, “The question is no longer whether virtual currency will remain but whether the regulation of fiat currencies will keep pace with frictional and transparent payments on blockchain.”

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