By James DavisThe United States Treasury Department released a statement on Tuesday revealing that crypto exchange Poloniex had agreed to pay over $7.5 million in order to settle charges of an alleged violation of international sanctions.
According to the agency, Poloniex allowed users from sanctioned jurisdictions, such as Sudan, Cuba, Syria and Cuba, to transact on the platform for five years, from 2014 to 2019. The 230 users collectively made transactions worth about $15.2 million during that period.
The US Treasury Department’s division for enforcing economic sanctions, OFAC (Office of Foreign Assets Control), said it was the duty of Poloniex to know and restrict accounts from sanctioned regions by using the Know-Your-Customer information.
OFAC stated that control measures introduced in 2017 had helped reduce sanctions violations significantly, but Poloniex failed to adopt them. The authority urged other digital asset firms to employ sanctions compliance measures to avoid any legal actions.
Poloniex History
USDC’s issuer Circle acquired Poloniex in 2018. The exchange would later spin out from its new parent company to become Polo Digital Assets to serve global customers. Circle then sold the trading platform to an unknown Asian investment company. It is worth highlighting that the deal didn’t include Poloniex’s American entity, which was shut down in October 2019.
According to a Circle spokesman, the firm agreed to assume several potential regulatory liabilities when it acquired Poloniex. They added that Circle’s executive was happy the sanctions violations charges were finally put to rest.
The latest settlement isn’t the first one. In September 2021, Poloniex had to pay over $10 million to the SEC (Securities and Exchange Commission) to settle charges of running an unregistered crypto exchange.
Another crypto exchange that has been previously found guilty of not complying with the sanctions is Bittrex. OFAC, together with the FinCEN (Financial Crimes Enforcement Network), demanded that Bittrex pay $52 million for allowing users from the Cremia region to make transactions worth more than $260 million between April 2014 and November 2017.
US Regulatory Environment
Poloniex joins a list of several American-based companies targeted by US authorities since the start of the year. In February, the SEC forced crypto exchange Kraken to pay over $30 million to settle its charges of violating security laws. The agency claimed that the exchange had been offering unregistered staking services to the public.
Meanwhile, the largest crypto exchange by trading volume, Binance, is reportedly negotiating with the Internal Revenue Service and the US Justice Department to settle various charges outside the court.
As US authorities continue going after crypto firms, many industry players believe the regulations needed to guide their activities are still unclear. Crypto exchange Coinbase moved to court last week to force the SEC to clarify crypto rules.