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US Launches First Criminal Prosecution for Alleged Cryptocurrency Sanctions Case

  • Richard Marley
  • May 17, 2022
  • 3 minutes read
  • 1548
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Criminal charges are issued by the US Justice Department for the first time for transmitting more than $10 million of Bitcoin to a virtual currency exchange sent by an American citizen to a country blacklisted by the US.

A federal judge of the US Justice Department disclosed on Friday about launching its first criminal prosecution constituting the apparent use of cryptocurrency to avoid US economic sanctions. 

U.S. Magistrate Judge Zia M. Faruqui of Washington, D.C., explains the reason for issuing a criminal objection against an American local involved in a virtual currency exchange worth more than $10 million of bitcoin to a country blacklisted by the US government. 

While some legal analysts contradict that virtual money is not subject to US sanction since they are moved outside of the traditional financial system, recent action taken by the Treasury Department’s Office of Foreign Assets Control requires federal courts to find otherwise. 

“The Department of Justice can and will continue to charge people who fail to concede with OFAC’s regulations consisting as to virtual currency” Faruqui stated. 

The Treasury Department assessed its foremost sanctions on a cryptocurrency “mixer” that apparently aided the source of hacked funds consisting of the Lazarus Group, a North-Korean government lined network charged with robbing an estimated $1.75 billion in cryptocurrency. 

Ari Redbord, a former senior adviser to the Treasury Department’s undersecretary for terrorism and financial intelligence proclaimed “The Justice Department will be actively looking to go after actors allegedly involved in cryptocurrency exchange, but it is also hard for cryptocurrency to evade sanctions”. 

US authorities issued charges in March after disclosing that a blacklisted country has set up a Pay-Pal type payment platform with the help of the defendant. Investigators utilized sophisticated blockchain analysis tools to trace that person’s action by accessing their internet address along with extracting details from the US financial institutions used by the suspect to fund its first exchange. Moreover, the offender stated that it could be using bitcoins while knowing that a specific country was sanctioned. 

US entities collected the legally required information about the defendant by utilizing “Know Your Customer” service. Faruqui concluded by claiming that the attack violated US law and the person faces liability for causing the two exchanges to transgress sanctions. 

Suggested Read: Crypto Providers at Risk of Money Laundering & Terror Financing, Says FMA