Shalini Nagarajan

<div id="highlights-block_6346789bcb59f" class="highlights">
 <ul>
 <li>Settlement marks OFAC’s largest enforcement action against a crypto business</li>
 <li>FinCEN imposed a separate fine covering violations of the Bank Secrecy Act</li>
 </ul>
 
</div>



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 <a href="https://home.treasury.gov/system/files/126/20221011_bittrex.pdf" target="_blank" rel="noreferrer noopener">statement</a> by the Treasury Department on Tuesday.&nbsp;&nbsp;



Because 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.



<h3>FinCEN imposes separate fine for violations of Bank Secrecy Act</h3>



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 <a href="https://www.fincen.gov/sites/default/files/enforcement_action/2022-10-11/Bittrex%20Consent%20Order%2010.11.2022.pdf" target="_blank" rel="noreferrer noopener">terms</a> of the settlement show FinCEN would transfer $24 million to OFAC after receiving the $29 million payment, because 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.&nbsp;



“OFAC will continue to hold accountable firms, in the virtual currency industry and elsewhere, whose failure to implement appropriate controls leads to sanctions violations,” she added.



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 <a href="https://cms.blockworks.co/tag/tornado-cash/" target="_blank" rel="noreferrer noopener">Tornado Cash</a>, <a href="https://cms.blockworks.co/decentralized-or-not-officials-say-tornado-cash-responsible-for-illicit-activity/" target="_blank" rel="noreferrer noopener">noting</a> the service was being used by North Korean state-sponsored hacking collective Lazarus Group to steal almost $455 million in ether.



This report was updated on Oct. 12 at 6:47 am ET to include Bittrex&#8217;s statement.



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Bittrex Crypto Exchange Fined $30M for US Sanctions Violation

Jacquelyn Melinek

<div id="highlights-block_621e76fb8de4a" class="highlights">
 <ul>
 <li>“There is no longer any room for doubt regarding the impact crypto assets are having on our global financial system,&#8221; said Farzam Ehsani, VALR CEO and co-founder</li>
 <li>VALR has processed over $7.5 billion in trading volume since its 2019 launch</li>
 </ul>
 
</div>



South African crypto exchange VALR raised a $50 million venture capital round in one of the largest fundraises for the continent on record.



The exchange raised $50 million — bringing the company’s valuation to $240 million — in a Series B round led by crypto asset manager Pantera Capital, VALR said Tuesday.



The round was oversubscribed with investors including Alameda Research, Cadenza, CMT Digital, Coinbase Ventures, Distributed Global, GSR, Third Prime and Avon Ventures, which is affiliated with Fidelity Investments. Existing investors Bittrex and 4Di Capital also wrote checks.



The funds will be used to expand across Africa and into other emerging markets like India, as well as bringing new products and services onboard and hiring.&nbsp;



In July 2020, VALR raised $3.4 million in a Series A. Its valuation has grown tenfold since.



“There is no longer any room for doubt regarding the impact crypto assets are having on our global financial system,&#8221; Farzam Ehsani, VALR CEO and co-founder, said in a statement.



VALR users can trade and custody more than 60 cryptocurrencies with relatively low fees. Since its 2019 launch, the startup has processed more than $7.5 billion in trades between 250,000 retail customers and 500 institutional clients.



Crypto has grown in Africa as funds have deployed capital to the continent. From July 2020 to June 2021, crypto adoption in Africa increased 1,200%, according to <a href="https://blog.chainalysis.com/reports/africas-grassroots-cryptocurrency-adoption/" target="_blank" rel="noreferrer noopener">Chainalysis</a>. Kenya, Nigeria, South Africa and Tanzania are considered regional crypto hubs.



“In addition to being the third-fastest growing cryptocurrency economy, Africa also has a bigger share of its overall transaction volume made up of retail-sized transfers than any other region at just over 7%, versus the global average of 5.5%,” the report says.&nbsp;



Last year, rapper Jay-Z and Jack Dorsey, current CEO of <a href="https://cms.blockworks.co/jack-dorseys-square-to-change-its-name-to-block/" target="_blank" rel="noreferrer noopener">Block</a>, formerly known as Square, created <a href="https://cms.blockworks.co/?s=africa#:~:text=Jack%20Dorsey%20and%20Jay%2DZ%20Created%20%E2%82%BFtrust%3B%20Here%E2%80%99s%20How%20its%20Board%20Plans%20to%20Deploy%20the%20500%20Bitcoins" target="_blank" rel="noreferrer noopener">₿trust</a>, a new endowment of 500 bitcoins for development across Africa and India. Three of the four ₿trust board members are in Nigeria, with one based in South Africa. 



&#8220;The world is on the precipice of huge financial change,” Ehsani said. “Crypto assets will become more and more pivotal to all our lives.”



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