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On March 31, 2023, the Office of Foreign Assets Control (OFAC) announced a $72,230.32 settlement agreement with Uphold HQ Inc. (Uphold), a global multi-asset digital trading platform, in connection with 152 apparent violations of the Iranian Transactions and Sanctions Regulations, the Cuban Assets Control Regulations, and Executive Order (E.O.) 13884. OFAC continues to focus on the virtual currency ecosystem which we have discussed here (Kraken) and here (Bittrex). This settlement provides another look at important compliance considerations for companies operating in the digital asset industry and a few practical tips.Continue Reading OFAC Finds Digital Assets Trading Platform in Violation of Sanctions

On November 28, 2022, the Office of Foreign Assets Control (OFAC) announced a $362,158.70 settlement agreement with Payward, Inc. (Kraken), an online virtual currency exchange, in connection with 826 apparent violations of the Iranian Transactions and Sanctions Regulations. This enforcement action highlights the OFAC compliance risks for virtual currency platforms and comes on the heels of the Bittrex settlement which we discussed here. Again, it is critical to assess your risks and take steps to make sure you’re addressing them with smart compliance and screening measures.Continue Reading OFAC Continues Focus on Virtual Currency Industry with Announced Settlement with Payward, Inc.

Settlement Agreement with Bittrex, Inc.

Today, on October 11, 2022, the Office of Foreign Assets Control (OFAC) announced a $24,280,829.20 settlement agreement with Bittrex, Inc., an online virtual currency exchange and hosted wallet service provider, in connection with 116,421 apparent violations of multiple sanctions programs. This enforcement action highlights the OFAC compliance risks for virtual currency platforms. So, assess your risks and take steps to make sure you’re addressing them with smart compliance and screening measures.Continue Reading OFAC Announces Hefty Settlement with Virtual Currency Exchange / Hosted Wallet Services Provider

On September 16, the United States Department of Justice (“DOJ”) released a report on the Role of Law Enforcement in Detecting, Investigating, and Prosecuting Criminal Activity Related to Digital Assets pursuant to President Biden’s Executive Order on Ensuring Responsible Development of Digital Assets (the “E.O.”). In its press release, the DOJ also announced the Criminal Division’s launch of the nationwide Digital Asset Coordinators Network (“DAC”) composed of designated federal prosecutors from U.S. Attorneys’ Offices nationwide to act as a go-to source for legal and technical matters relating to prosecutions of crimes involving digital assets.Continue Reading DOJ Issues Report on Efforts to Combat Digital Asset Criminal Activity and Announces Designated Prosecutors to Support

Background

Last Friday, the Office of Foreign Assets Control (OFAC) published more targeted guidance for digital asset companies related to compliance with sanctions and best practices for mitigating risks. This guide comes on the heels of OFAC’s first enforcement action against a cryptocurrency exchange, SUEX (which we discussed in our blog here). Given the rise of ransomware threats from malicious cyber-actors that are often linked to sanctioned countries and persons, the lack of very robust regulatory oversight of the virtual currency world, the emerging nature of the technologies, and the growth of the market, it is clear that OFAC hopes crypto companies will pay more attention to sanctions risks and compliance with the issuance of this guidance. While the guide covers a lot of familiar territory, we outline a few key takeaways below.Continue Reading Sanctions Compliance for Crypto: OFAC Issues Guidance Targeting Virtual Currency Industry

Yesterday, the Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions on SUEX OTC, S.R.O, a cryptocurrency exchange, for its role in laundering money to ransomware attackers. According to OFAC, SUEX facilitated criminal transactions involving at least eight ransomware variants and 40% of SUEX’s known transaction history involved bad actors. The designation of SUEX is the first time OFAC has sanctioned a virtual currency platform – and this approach may prove to be a useful regulatory tool to make malicious cyberactivity less profitable and therefore deter cyber-criminals. Treasury Secretary Janet Yellen said the government is “committed to using the full range of measures, to include sanctions and regulatory tools, to disrupt, deter, and prevent ransomware attack[s].”
Continue Reading First OFAC Sanctions Against a Cryptocurrency Exchange: Could the Designation of SUEX Signal an Enforcement Trend to Combat Cybercrime?