Breaking: Poloniex Exchange Pays $7.6 Million To Settle Charges With U.S. Treasury

Crypto News: What comes as a surprise to many and a breather for many Poloniex customers, the Boston-based crypto exchange will pay a whopping $7.59 million to settle sanction violations allegations with the U.S. Treasury Department’s Office of Foreign Asset Control (OFAC). According to a press statement issued by OFAC, the platform committed over 66,000 violations of multiple sanctions programs. These violations allowed customers from Crimea, Cuba, Iran, Sudan, and Syria to trade up to a total $15 million between January 2014 and November 2019, the report states.

U.S. Treasury Announces Settlement

The Treasury Department highlighted that Poloniex’s operations started in January 2014, during which users were able to fund their accounts and engage in trading activity. However, Poloniex did not establish a sanctions compliance program until May 2015 — sixteen months after it had operated without maintaining any form of KYC. This program required a check of KYC information for new clients who reside in locations that are subject to extensive OFAC penalties but this screening procedure was not applied retroactively to previously existing customers.

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The OFAC further highlights that despite the fact that Poloniex made efforts to determine and restrict accounts with a nexus to Iran, Cuba, Sudan, Crimea and Syria — as part of its compliance program — some users seemingly located within these jurisdictions continued to use Poloniex’s platform to engage in cryptocurrency transactions.

The OFAC’s official document was quoted as saying:

As a result, customers who had self-identified before May 2015 as residing in a sanctioned jurisdiction were generally able to continue using Poloniex’s platform.

Crypto’s Growing Regulatory Woes

With this new enforcement action, the regulatory body emphasized the importance “for new companies and those involved in emerging technologies to incorporate sanctions compliance into their business functions” from the very beginning. This is especially important when the companies seek to offer financial services to a global customer base, as was the case with other recent cases involving online digital asset companies, the OFAC said.

As things stand, Poloniex is held in ownership by an alliance of several businesses, one of which is Tron’s founder, Justin Sun. Prior to that, the American cryptocurrency corporation Circle had a brief ownership stake in Poloniex, although it decided to sell the company after a little under two years.

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