Poloniex Pays $7.6 Million Fine for Alleged Sanctions Violation

Poloniex LLC, an entity once connected to the Justin Sun-founded crypto exchange, reached a settlement agreement with the Treasury Department to pay over $7 million for alleged sanctions violations. 

• As announced by the Office of Foreign Assets Control on Monday,  Poloniex agreed to pay $7,591,630 for violating sanctions against Crimea, Cuba, Iran, Sudan, and Syria between January 2014 and November 2019. 

• The exchange had apparently allowed customers in such jurisdictions to engage in digital asset transactions – including trades, deposits, and withdrawals – with assets totaling $15,335,349.

• These occurred despite Poloniex having reason to know the locations of these customers, including Know Your Customer (KYC) information and IP addresses. 

• “Poloniex conveyed economic benefit to 232 persons in several jurisdictions subject to OFAC sanctions and thereby harmed the integrity of multiple OFAC sanctions programs,” read a Treasury document.

• The Department recognized that Poloniex made efforts to restrict accounts connected to these jurisdictions as part of its compliance program, but some users in those regions still managed to use the platform.

• It also noted multiple mitigating factors, including that Poloniex was a small startup at the time of the violations, and that the violations represented a tiny fraction of the exchange’s total volume. 

• Aside from centralized exchanges, the Treasury Department published a report last month labeling decentralized finance as a national security threat for its potential use in money laundering and sanctions violation. 

• In August 2021, Poloniex agreed to pay a $10 million fine to the Securities and Exchange Commission for running an unregistered cryptocurrency exchange.