- Settlement marks OFAC’s largest enforcement action against a crypto business
- FinCEN imposed a separate fine covering violations of the Bank Secrecy Act
Cryptocurrency exchange Bittrex agreed to pay the US Treasury a record fine of $24.3 million for allegedly violating multiple US sanctions.
This marks the federal agency’s biggest penalty on a crypto business for sanction violations.
The Bellevue, Washington-based company processed transactions worth over $263 million from customers located in the Crimea region of Ukraine, Cuba, Iran, Sudan and Syria between 2014 and 2017, according to a statement by the Treasury Department on Tuesday.
Since Bittrex is based in the US, it is prohibited from engaging in business with users in these jurisdictions due to applicable sanctions.
“Based on internet protocol address information and physical address information collected about each customer at onboarding, Bittrex had reason to know that these users were in jurisdictions subject to sanctions,” the Treasury said, adding that the exchange wasn’t screening this information for terms associated with sanctioned jurisdictions.
FinCEN imposes separate fine for violations of Bank Secrecy Act
Both the Treasury Department’s Office of Foreign Assets Control (OFAC) and the Financial Crimes Enforcement Network (FinCEN) levied fines of about $24 million and $29 million each on Bittrex. The latter penalty arose due to violations of the Bank Secrecy Act, as Bittrex failed to implement an effective anti-money laundering program.
But terms of the settlement show FinCEN would transfer $24 million to OFAC after receiving the $29 million payment, since some of the violations are tied to the “same underlying conduct.” Effectively, Bittrex will have to pay $29.3 million in total.
“Virtual currency exchanges operating worldwide should understand both who — and where — their customers are,” OFAC Director Andrea Gacki said in a statement.
“OFAC will continue to hold accountable firms, in the virtual currency industry and elsewhere, whose failure to implement appropriate controls leads to sanctions violations.”
A Bittrex spokesperson said the company “is pleased to have fully resolved this matter with OFAC and FinCEN on mutually agreeable terms.“
“Since inception, Bittrex has strived to comply with all government requirements diligently and in good faith,” they added.
US authorities have increased efforts to penalize crypto businesses that are either offering unregistered securities or overstepping authority. In August, the OFAC sanctioned major Web3 mixing service Tornado Cash, noting the service was being used by North Korean state-sponsored hacking group Lazarus to steal almost $455 million in ether.
This report was updated on Oct. 12 at 6:47 am ET to include Bittrex’s statement.
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