Yesterday, the US Treasury's Financial Crime Enforcement Network (FinCEN) and the Office of Foreign Assets Control (OFAC) announced that they had reached a settlement with Bittrex, the cryptocurrency exchange. The cryptocurrency exchange was accused of violating sanctions and failing to "implement effective sanctions compliance controls" between March 2014 and December 2017. The following are relevant details.

Crypto Exchange Bittrex accused of violating US sanctions

Bittrex, a crypto asset exchange headquartered in Washington State, was accused by FinCEN and OFAC of 116421 clear violations of multiple sanctions plans. According to the regulatory authority of the US Treasury Department, the origin of the violations is the transactions of people in Crimea, Ukraine, Cuba, Iran, Sudan and Syria. US officials said that the crypto transactions with a total value of US $263.45 million violated US financial sanctions.

Andrea Gacki, director of OFAC, explained that when virtual asset service providers (VASPs) do not take advantage of strict sanctions compliance, transactions may threaten the whole country. Moreover, when virtual currency companies fail to implement effective sanctions compliance control, including screening customers located in jurisdictions subject to sanctions, they may also become a tool for illegal actors threatening the national security of the United States.

In March this year, FinCEN issued a dangerous signal on circumventing sanctions through encrypted assets. A year ago, FinCEN accused Bitmex, the crypto derivatives exchange, of deliberately violating the bank secrecy law, and said that the exchange would face a fine of $100 million. In the past few years, OFAC of the US Department of the Treasury has also been busy sanctioning crypto assets. Recently, regulators have also banned the Ethernet hybrid application Tornado Cash.

In July 2022, the New York Times quoted five insiders as saying that OFAC was allegedly investigating the North Sea monster exchange, which is headquartered in San Francisco. Until December 30, 2020, OFAC and Bitgo reached a settlement of US $98830 on sanctions violations. According to a notice from OFAC on February 18, 2022, Bitpay reached a settlement with the Ministry of Finance, and the crypto payment processor agreed to remit US $507375 to settle its potential civil liability.

For the transactions from 2014 to 2017, Bittrex has agreed to pay OFAC and FinCEN the charges and potential liabilities against VASP. FinCEN plans to use a portion of the funds as part of the settlement agreement. The regulatory agency's notice revealed that Bittrex had agreed to remit US $29280829.20 because it deliberately violated BSA's anti money laundering plan and SAR requirements. FinCEN will credit the payment of USD 24280829.20 as part of the agreement between Bittrex and OFAC to settle its potential debt.

FinCEN explained in detail that Bittrex's anti money laundering plan failed to identify risks between 2014 and 2017, and the company failed to submit any suspicious activity report (sar) during the three years.

FinCEN's announcement concluded that Bittrex has not yet been able to submit suspicious transaction reports on a large number of transactions involving jurisdictions subject to sanctions, including suspicious transactions involving jurisdictions other than those subject to sanctions.

ending

In the end, FinCEN fined Bittrex US $29.8 million, but said that it would include the US $24 million fine imposed by the exchange on OFAC, which means that the company will only pay a fine of slightly less than US $30 million. It claimed through the company's lawyer that the settlement agreement fully resolved OFAC's investigation of transactions in the sanctioned jurisdictions that mainly occurred in 2017, and FinCEN's statement that Bittrex did not fully implement all its anti money laundering program controls in 2018. Importantly, both FinCEN and OFAC acknowledge that Bittrex's long-term responsive remedies have greatly reduced the risk of continuing violations.