OFAC Slaps Poloniex with Hefty Fine for Sanctions Missteps

OFAC Slaps Poloniex with Hefty Fine for Sanctions Missteps

Time Stamp: May 3, 2023 11:31 AM
Source Node: 2081246
  1. Poloniex fined $7.6 million for sanction violations
  2. Compliance protocols lacked proper measures
  3. Transactions exceeded $15 million in restricted regions

Crypto exchange Poloniex has been ordered by the US Treasury Department’s Office of Foreign Assets Control (OFAC) to pay a massive $7.6 million fine. The company had engaged with over 200 clients across a range of sanctioned areas, violating US restrictions.

Between July 2015 and September 2019, Poloniex’s inadequate compliance measures resulted in almost 66,000 digital asset-related transactions from customers in sanctioned territories. These transactions, valued at over $15 million, involved countries such as Ukraine’s Crimea region, Cuba, Iran, Sudan, and Syria.

Despite having knowledge of customer locations, Poloniex still conducted business with these clients. OFAC noted that the company’s sanctions compliance program, established in May 2015, did not cover existing customers in sanctioned regions.

It wasn’t until June 2017 that Poloniex began blocking customers from restricted areas. Moreover, customers in Crimea were not blocked until August 2017, leading to over 57,000 apparent violations.

Despite efforts to limit access from sanctioned jurisdictions, some clients in those areas remained unblocked, continuing to use the platform. Circle Internet Financial Limited (CIFL) acquired Poloniex in February 2018 and introduced additional compliance measures. 

However, some violations persisted until November 2019, when Poloniex was sold to another party. The platform currently has no employees or operations.

OFAC determined the settlement amount based on the harm Poloniex caused to the integrity of various US sanctions programs. The company did not voluntarily self-disclose the violations, and most transactions involved small amounts of money.

This case emphasizes that online digital asset companies, like all financial service providers, must comply with OFAC sanctions to avoid penalties.

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José is a crypto enthusiast who trades crypto night and day. He loves to share his trading stories and experiences in all his published articles. José likes to hang out and travel to meet new friends. Enjoys sushi, vodka, and tequila.

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