On Tuesday, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) and Financial Crimes Enforcement Network (FinCEN) announced two settlements for approximately $24.3 million and $29.3 million with virtual currency exchange Bittrex Inc. The first-of-their-kind parallel enforcement actions target the Bellevue, Washington-based exchange for violating country-specific sanction and anti-money laundering obligations.
The press release explained that the OFAC settlement resolves allegations that Bittrex violated multiple sanction programs for a total of 116,421 apparent violations by failing to prevent individuals in the Crimea region of Ukraine, Cuba, Iran, Sudan, and Syria from using its platform. Allegedly, users in those areas traded about $263.4 million in virtual currency between March 2014 and December 2017.
Bittrex should have known that individuals from sanctioned regions were seeking to illegally use its platform based on their internet protocol (IP) addresses and physical addresses collected during customer onboarding, the press release explained.
The FinCEN fine relates to liability for Bittrex’s purported failure to maintain an effective anti-money laundering program, including inadequate and ineffective transaction monitoring resulting in significant exposure to illicit finance, the announcement said. FinCEN further faulted Bittrex for failing to file suspicious activity reports.
“When virtual currency firms fail to implement effective sanctions compliance controls, including screening customers located in sanctioned jurisdictions, they can become a vehicle for illicit actors that threaten U.S national security,” said OFAC Director Andrea Gacki. “Virtual currency exchanges operating worldwide should understand both who—and where—their customers are. OFAC will continue to hold accountable firms, in the virtual currency industry and elsewhere, whose failure to implement appropriate controls leads to sanctions violations.”
Lastly, FinCEN will credit the payment of approximately $24.3 million towards Bittrex’s agreement to settle OFAC’s allegations, the news release noted.
