The OFAC has announced that the cryptocurrency exchange, Poloniex, has agreed to pay a sum of almost $7.59 million as a settlement accounting for more than 65,000 violations of different sanction programs. The OFAC highlighted that the settlements fund would be utilized to settle the civil case of Poloniex for violations of US sanctions in Crimea, Cuba, Iran, Syria, and other countries. The governmental body alleged that the crypto exchange allowed users to trade digital assets worth more than $15 million between January 2014 and November 2019.
When Poloniex was launched back in 2014, it did not have any sanctions compliance program in place until the next year in May 2015. It allowed users from sanctioned jurisdictions to continue using the platform and conducting trades. However, it is believed that the violations of Poloniex were not voluntarily self-disclosed.
“Although Poloniex made efforts to identify and restrict accounts with a nexus to Iran, Cuba, Sudan, Crimea, and Syria pursuant to its compliance program, certain customers apparently located in these jurisdictions continued to use Poloniex’s platform to engage in online digital asset-related transactions.”
Circle acquired Poloniex back in 2018, which led to an improvement in the firm’s compliance measures. However, this feat was achieved as soon as the crypto exchange traced and shut down accounts with IP addresses operating in Crimea. Later on, a group of investors, including Justin Sun, purchased Poloniex from Circle in 2019.
As per OFAC,
“Poloniex and Circle provided substantial cooperation in connection with OFAC’s investigation into the Apparent Violations.”
Regulatory Crackdown Against Crypto Gears Up
In its report, the OFAC highlighted that Poloniex was merely a small startup at the time of most of the allegations against it. With the recent regulatory action, the regulating body has emphasized the importance for all new and existing organizations to inject regulatory compliance within their business functions.
However, this is deemed important if companies aspire to offer financial services to a global customer base, similar to other recent cases involving online digital asset companies. The settlement of Poloniex with the OFAC comes during a time when the crypto market has become the subject of an increased regulatory crackdown. The masses believe that these actions would continue until crypto-based organizations are forced into complete compliance, which is bound to snatch away the essence of crypto usage.