Poloniex Agrees to Pay $7.6M in Settlement of Sanctions Violations

In a settlement with the Office of Foreign Asset Control (OFAC), Poloniex LLC, a former subsidiary of the Poloniex cryptocurrency exchange, will remit $7.59 million to settle accusations of sanction violations, stated by the watchdog on May 1st.

OFAC reported that the platform had violated nearly 66,000 sanction programs between January 2014 and November 2019, by facilitating the crypto trading of up to $15 million by customers from Crimea, Cuba, Iran, Sudan, and Syria.

The Poloniex sanctions compliance program was not implemented until May 2015, despite being launched in January 2014. Furthermore, sanctioned jurisdiction customers who registered for the platform before the compliance program were still permitted access.

Office of Foreign Asset Control (OFAC), in a press release, remarked, “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.” 

A consortium of entities own Poloniex at present, including Tron’s inventor Justin Sun, one of the companies that own Poloniex LLC. Another U.S. cryptocurrency company owned Poloniex before that, and Circle, which sold it less than 2 years after acquiring control. Due to the sale of the exchange business, Poloniex LLC appears to be the only U.S. legal entity still operating in the United States.

Poloniex and Huobi, a fellow cryptocurrency exchange, announced a “strategic partnership” that aimed to boost Huobi Token’s “ecosystem development.” 

As stated in OFAC’s report Monday, Poloniex LLC “was a small startup at the time of most of the alleged violations.” Circle’s efforts to improve Poloniex’s sanctions compliance program during its ownership were considered mitigating factors.

OFAC considered Circle and Poloniex’s cooperation with OFAC an additional advantage. Poloniex’s spokesperson did not immediately respond to a request for comment.

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