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Tornado

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 Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our&nbsp;<a href="https://tokenist.com/terms-of-service/" style="text-decoration:underline;color:#3c7b7b" target="_blank" rel="noreferrer noopener" class="deco-link">website policy</a>&nbsp;prior to making financial decisions.
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<p class="has-drop-cap">According to <a href="https://ofac.treasury.gov/recent-actions/20230501_33" target="_blank" aria-label=" (opens in a new tab)" rel="noreferrer noopener nofollow" class="deco-link">a press release</a> from Monday, May 1st, the cryptocurrency exchange Poloniex agreed to settle with OFAC for numerous sanctions violations that occurred between 2014 and 2019. Allegedly, customers from multiple sanctioned regions were allowed to use the platform to trade around $15 million and the company will pay a fine of just over $7.5 billion.</p> 
<h3 id="poloniex-settles-with-ofac-over-alleged-sanctions-violations">Poloniex Settles With OFAC Over Alleged Sanctions Violations</h3> 
<p>This Monday, the US Treasury’s Office of Foreign Assets Control (OFAC) announced it had reached <a href="https://ofac.treasury.gov/media/931701/download?inline" target="_blank" aria-label=" (opens in a new tab)" rel="noreferrer noopener nofollow" class="deco-link">a settlement with Poloniex</a>, a cryptocurrency exchange. The exchange allegedly failed to comply with sanctions and allowed users located in Crimea, Cuba, Iran, Sudan, and Syria to trade a combined value of $15,335,349 using its platform.</p> 
<p>According to OFAC, there was a total of about 65,000 sanctions violations of different kinds between early 2014 and late 2019. They, in part, resulted from relatively poor KYC practices at the time of the exchange’s launch. The problem persisted even after Poloniex increased its security and compliance efforts as it allegedly failed to remove already existing users that were based in sanctioned regions.</p> 
<p>As a result of the allegations, Poloniex has agreed to remit $7,591,630. OFAC states that the amount to be paid in the settlement reflects the fact that the violations were not voluntary, as well as the fact that the exchange fully cooperated and self-reported. Additionally, the Treasury does not consider the violations as egregious and has factored in the fact that Polonies was only a small startup when the bulk of them occurred.</p> 
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<h3 id="ofac-ramping-up-pressure-on-digital-assets-related-sanctions-violations">OFAC Ramping Up Pressure on Digital Assets-Related Sanctions Violations</h3> 
<p>Over the previous months, the US Treasury’s Office of Foreign Assets Control has been increasingly active when it comes to monitoring, preventing, and cracking down on cryptocurrency-related sanctions violations. In late November 2022, for example, Kraken, a major cryptocurrency exchange, <a href="https://tokenist.com/kraken-settles-with-ofac-over-alleged-violation-of-iran-sanctions/" rel="dofollow" class="deco-link">agreed to pay a fine of $300,000</a>, and, only a month earlier, Bittrex paid nearly $25 million for failing to prevent users from Crimea, Syria, Cuba, Sudan, and Iran to access its platform.</p> 
<p>Last year also saw what has perhaps been the most controversial digital assets-related OFAC action. On August 8th, the United States <a href="https://tokenist.com/tornado-cash-sanctioned-by-the-us-would-prohibition-work-on-defi/" rel="dofollow" class="deco-link">blacklisted Tornado Cash</a>, a cryptocurrency mixer, due to its being used by various sanctioned entities including North Korea’s infamous hacker organization—the Lazarus Group.</p> 
<p>The move faced significant backlash as some advocacy groups—Coin Center being the most prominent one—argued that Tornado Cash is a piece of <a href="https://www.coincenter.org/analysis-what-is-and-what-is-not-a-sanctionable-entity-in-the-tornado-cash-case/" target="_blank" aria-label=" (opens in a new tab)" rel="noreferrer noopener nofollow" class="deco-link">open-source software and therefore not sanctionable</a> under the law. The dissent ultimately <a href="https://tokenist.com/coin-center-sues-treasury-and-ofac-over-tornado-cash-sanctions/" rel="dofollow" class="deco-link">turned into a lawsuit</a> against OFAC in early October.&nbsp;</p> 
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<p><strong><em>Do you think existing KYC practices are sufficient to prevent sanctions evasion? Let us know in the comments below.</em></strong></p> 
<p>The post <a rel="nofollow" href="https://tokenist.com/poloniex-agrees-to-pay-7-5m-fine-for-65k-alleged-ofac-sanctions-violations/">Poloniex Agrees to Pay $7.5M Fine For 65K Alleged OFAC Sanctions Violations</a> appeared first on <a rel="nofollow" href="https://tokenist.com">Tokenist</a>.</p>

Poloniex Agrees to Pay $7.5M Fine For 65K Alleged OFAC Sanctions Violations

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