Poloniex will pay $7.6M fee for apparent sanctions violation

Poloniex will pay $7.6M fee for apparent sanctions violation

02.05.2023 08:47 (Updated 02.05.2023 08:05)
avatar
by Sviatoslav Pinchuk
2 min read

OFAC found that crypto exchange Poloniex didn’t maintain proper know-your-customer rules between 2014 and 2019. On May 1, the agency announced that Poloniex had agreed to a $7.6 million settlement with U.S. authorities related to more than 65,000 apparent sanctions violations.

In a press release, OFAC states that Poloniex violated U.S. sanctions against Crimea, Sudan, Iran, and Syria by providing services to customers from those countries:

Between January 2014 and November 2019, the Poloniex trading platform allowed customers apparently located in sanctioned jurisdictions to engage in online digital asset-related transactionsโ€”consisting of trades, deposits, and withdrawalsโ€”with a combined value of $15,335,349, despite having reason to know their location based on both Know Your Customer information and internet protocol address data. ย 

OFAC said the violations weren’t “egregious” because the exchange had failed to review its clients’ KYC data before the sanctions compliance program was implemented in March 2015. Poloniex launched in January 2014, and because the compliance program was also not retroactive, users from sanctioned countries were still able to use the platform:

Although Poloniex made efforts to identify and restrict accounts with a nexus to Iran, Cuba, Sudan, Crimea, and Syria pursuant to its compliance program, certain customers apparently located in these jurisdictions continued to use Poloniexโ€™s platform to engage in online digital asset-related transactions.

In 2018, Circle acquired Poloniex, after which OFAC found that the company’s compliance measures had “significantly improved.” Specifically, Circle had closed accounts that operated using IP addresses from Crimea. Later in 2019, a group of investors, including Justin Sun, the founder of Tron, bought the company from Circle.

OFAC noted that the fact that Poloniex LLC was a relatively small startup during most of the alleged violations and that Circle had enhanced Poloniex’s compliance program to comply with the sanctions while it owned the company were both factors that helped reduce the severity of the penalty imposed.

Author

  • Man who simply bought some BTC for domestic needs in 2014 and then forgot about it till 2017. The dude who got Ethereum in 2017 by misclick and sold it in 2018 "just to try". Lost 1 Florida house in XEM in 2018, Sviatoslav finally decided to trade reasonably and now he is one of the most analytical and data-driven trader in Crypto Industry. Has Bachelor Degree of Chinese Interpreter and deep practical experience in competitive niches SEO.

Subscribe to
Crypto Ping Pong Digest

Trash style news. You will definitely like

Trending news

Arrow previous
Arrow next
Yellow background Yellow background
Subscribe and be in touch
Click here