Poloniex Exchange, a well-known cryptocurrency exchange, has been investigated for breaching numerous sanctions programs and has struck a settlement with the US Treasury Department’s Office of Foreign Asset Control (OFAC).
The potential breach of several sanctions dates back to January 2014, when Poloniex Inc., as it was then known, operated an online trading and settlement platform. According to recent Department of Treasury statistics, Poloniex is resolving 65,942 suspected breaches of numerous sanctions programs.
According to a recent update, the Treasury issued a comprehensive enforcement of the Poloniex-OFAC deal. Poloniex was ordered to pay $7,591,630 in compensation for its potential breaches of numerous US sanction programs beginning in January 2014.
Poloniex, which developed a platform for trading digital assets, made it simple for its consumers to fund their accounts and participate in other trading activities.
Customers from US-sanctioned territories and nations were among those who used Poloniex during its first launch and operation. It was stated that Poloniex has no KYC (know your customer) procedure or sanctions compliance program for its consumers at the time of its trading platform debut in 2014. However, in May 2015, the exchange implemented a sanctions compliance program and KYC to verify supported users in accordance with US laws.
However, OFAC had already determined that Poloniex exchange violated the US multiple sanction programs when it failed to exercise due diligence at the outset and operated its platform without a sanctions compliance program for 16 months.
OFAC also expressed concern that even though Poloniex created a KYC procedure for users and a sanction compliance program, existing user accounts in sanctioned countries before the KYC implementation were not reviewed to comply with the sanctions compliance program.
Between January 2014 and November 2019, the volume of transactions on the Poloniex exchange and trading platform originated from users in sanctioned jurisdictions and countries totaled USD 15,335,349.
This was a breach of the United States’ numerous sanction programs, which barred customers from sanctioned regions from engaging in the US-based registered trading platform. Sudan, Crimea, Syria, Iran, and Cuba were among the nations and jurisdictions sanctioned by the US at the time.
The statutory maximum civil monetary penalty for an alleged violation of US multiple sanctions is $19,692,872,800, according to the Treasury’s enforcement statement and report.
However, in this case, the OFAC determined and resolved that Poloniex’s apparent violations were not voluntarily self-disclosed and were not egregious. Nonetheless, according to OFAC enforcement guidelines, the minimum civil monetary penalty applicable in this case is $99,237,000, with a settlement amount of $7,591,630, reflecting general factors as seen in this report.
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