Poloniex Settles With OFAC for $7.6M Over Sanctions Violations

OFAC found that while Poloniex did not voluntarily disclose its apparent violations of sanctions programs, the infractions were not considered to be especially severe or harmful

by Sebastian Sinclair /

May 2, 2023 10:28 am

jokerpro/Shutterstock modified by Blockworks

Crypto exchange Poloniex has agreed to pay over $7.5 million to settle charges related to tens of thousands of sanctions violations with the Office of Foreign Assets Control (OFAC). The violations are alleged to have occurred over a period of more than four years.

The Delaware-based company has agreed to pay more than $7,591,000 to settle its potential civil liability for 65,942 violations that occurred between September 2015 and November 2019.

OFAC accused Poloniex of allowing customers in sanctioned jurisdictions to engage in digital asset-related transactions, despite having reason to know their location through know-your-customer information and internet protocol address data.

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These transactions amounted to a combined value of $15.3 million across 232 customers from sanctioned jurisdictions including Cuba, Iran, Sudan, Syria and Crimea, according to a statement from the Treasury Department on Monday.

Poloniex later halted trading by US residents in November 2019 before being sold to Polo Digital Assets, an “Asian-backed” investment group that included the likes of Tron’s Justin Sun.

OFAC found that while Poloniex did not voluntarily disclose its apparent violations of sanctions programs, the violations were not considered to be especially severe or harmful.

Circle Internet Financial Limited acquired Poloniex in 2018 and implemented additional internal sanctions compliance controls that were found to have reduced the rate of violations.

Certain violations persisted in the 12 months that followed, mainly the result of a small number of accounts opened by people located in Crimea, the US Treasury said.

The enforcement release describes the alleged violations in detail and highlights the significance of using all available location-related information to create a risk-based sanctions compliance program.

This approach is essential to minimize the risk of offering services to individuals in sanctioned jurisdictions, the Treasury said.

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