Poloniex Reaches $7.6M Settlement for Violation Charges
- Poloniex allegedly allowed users from restricted nations like Iran, Cuba, and Sudan to use the exchange.
- OFAC said the $7.6 million will be used to settle the exchange’s violation case.
Reports released by the US Treasury Department’s Office of Foreign Asset Control revealed that crypto exchange Poloniex has agreed to a $7.6 million settlement relating to more than 65,000 suspected violations of numerous sanctions programs. US prosecutors and civil investigators have been focusing on cryptocurrency companies for years for offering “illegal services” and violating laws meant to stop illegal conduct.
Poloniex allegedly allowed users from the Crimea, Cuba, Iran, Sudan, and Syria to trade up to $15 million in total between January 2014 and November 2019. Although Poloniex began operations in January 2014, it did not implement a sanctions compliance program until May 2015. According to a Treasury document, the compliance program was also not retroactive, allowing users of the network from sanctioned states to keep using it.
According to the OFAC,
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.
Poloniex, which was briefly owned by US crypto company Circle, is currently run by a group of organizations, including Tron’s Justin Sun. In 2022, Poloniex and crypto exchange Huobi announced plans to launch a partnership that would help boost the Huobi ecosystem.
This news comes as US regulators continue to crackdown on crypto exchanges. The US Commodity Futures Trading Commission (CFTC) recently sued Binance and its CEO and founder, Changpeng Zhao, for running an “illegal” exchange and having a “sham” compliance program.
The CFTC accused Binance, its CEO, and its former top compliance employee of “willful evasion” of US law “while engaging in a calculated strategy of regulatory arbitrage to their commercial benefit”.
This story is developing and will be updated to include more details.