The cryptocurrency industry has a target on its back – and perhaps justifiably so.  The SEC, CFTC and OFAC have been bringing a number of regulatory enforcement actions, including against Bittrex, Inc. ($24,280,829.20 in settlements with OFAC and FinCEN) and Payward, Inc. d/b/a Kraken ($362,158 settlement with OFAC).  Yet, the cryptocurrency has lots to worry about when it comes to compliance – fraud, cybersecurity, and a strong line up of regulators looking to exert increased control over the industry.  Crypto exchange companies better take heed or they could find themselves in the enforcement cross-hairs.

The latest to fall – Poloniex LLC, a Delaware company that operated an online trading and settlement platform, i.e. a crypto exchange, agreed to pay OFAC $7.591 million for 65,942 violations of multiple sanctions programs.  Between January 2014 and November 2019, Poloniex’s trading platform permitted customers from sanctioned jurisdictions to conduct crypto transactions (i.e. trades, deposits, withdrawals) worth a combined total of $15.335 million.  Poloniex had KYC information and internet protocol address data indicating that customers were located in prohibited jurisdictions for conducting business. Poloniex did not voluntarily disclose the conduct.  OFAC determined that the violations were non-egregious.

In this Episode, Mike and Matt review the crypto OFAC cases and point out important trends and compliance steps.