Crypto Exchange Bittrex Pays $53 Million to Settle Sanctions Claims • The Register

Bittrex will spend $53 million after being accused of violating US sanctions and violating federal money laundering laws and other banking rules.

Specifically, the cryptocurrency exchange will pay $24 million to settle allegations by the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) and $29 million to the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) to settle the claims to be paid to this authority. This will be OFAC’s largest virtual currency enforcement action to date and the first parallel enforcement action by the two federal organizations in the crypto coin space.

Bittrex, based in Bellevue, Washington, has allegedly done business with netizens in Cuba, Iran, Sudan, Syria and Crimea, which OFAC said would violate US sanctions. The Treasury argued that the virtual currency exchange should have known certain users were located in these sanctioned countries based on the IP and physical address information collected during the customer onboarding process.

“Due to deficiencies related to Bittrex’s sanctions compliance procedures, Bittrex has failed to prevent individuals who appear to be in the sanctioned jurisdictions from using its platform to conduct transactions related to virtual currencies worth $263,000,000,” the settlement agreement reads.

To settle these fees, the crypto exchange agreed to pay $24,280,829.20

The digital money company also “willfully” violated US bank secrecy requirements for anti-money laundering and suspicious activity reporting, FinCEN claimed. This ultimately cost the company another $29,280,829.20.

Under this US law, banks and other “money services companies” like Bittrex must implement an anti-money laundering program to prevent criminals from using the company to clean up their ill-gotten gains and fund terrorist activities. These programs must include training and education for employees to recognize suspicious transactions, and they require financial institutions to report suspicious activity.

But according to FinCEN, Bittrex has done a really bad job here as well.

According to court documents filed by FinCEN [PDF]:

Then, a year later, as the exchange’s transaction volume grew to 23,800 per day and its daily value reached $97.9 million, “the company continued to rely on the same two employees to manually review all of its transactions for suspicious activity.” , said FinCEN , adding that this manual process is “demonstrably ineffective”.

The company has not filed a single SAR between 2014, when it was founded, and May 2017.

“For years, Bittrex’s anti-money laundering program and failures in reporting suspicious activity have unnecessarily exposed the US financial system to threat actors,” Himamauli Das, acting director of FinCEN, said in a statement.

“Bittrex’s failures led to exposure from high-risk counterparties, including sanctioned jurisdictions, dark web markets, and ransomware attackers.” ®