US Treasury Department Fines Bittrex $29.3 Million For Violation of AML Laws and BSA
Cryptocurrency exchange Bittrex has been charged with the violation of 116,421 sanction programs between March 2014 and December 2017 by US regulators. The Treasury’s Office of Foreign Assets Control (OFAC) and Financial Crimes Enforcement Network (FinCEN) have both fined the exchange a total civil penalty of $29.3 million.
Bittrex To Pay OFAC $24,280,829
According to a statement provided by the Treasury, the crypto exchange Bittrex has consented to pay the sum of $24,280,829 to OFAC to settle a possible civil liability. This comes after the Treasury charged the exchange over compliance issues.
The Bellevue, Washington-based Bittrex allowed the illegal use of its platform by persons based in the Crimea region of Ukraine, Cuba, Iran, Sudan, and Syria. According to the applicable sanctions, these jurisdictions are banned from transacting with persons in the United States.
Between March 2014 and December 2017, the Treasury found people in these jurisdictions had engaged in approximately $263,451,600.13 worth of cryptocurrency-related transactions on the exchange platform. The Treasury believes Bittrex was in the know of these users’ jurisdictions through the use of IP addresses and physical addresses collected during their onboarding.
However, Bittrex claimed that it had no customer screening system during this period, and the OFAC acknowledged that the exchange was still new at the time of the violations. Also, OFAC stated that Bittrex cooperated with their investigations and swiftly launched measures to resolve most of the violations.
Bittrex’s Case With FinCen
Similarly, FinCEN also imposed a $29.3 million penalty on Bittrex over Anti-money laundering (AML) law violations and suspicious activity report (SAR) according to the US Bank Secrecy Act (BSA).
FinCen says the exchange knows that it isn’t supposed to violate BSA laws since it is a licensed money-service operator. Instead of adopting widely used software monitoring tools, the company employed two minimally trained staff to oversee an average of 20,000 transactions daily.
The Enforcement agency also noted that Bittrex did not meet its SAR requirements and did not file any SAR from 2014, when it started operations, to May 2017. Between May 2017 and November 2017, the exchange filed only one suspicious activity report after hiring more staff to monitor transactions.
Also, the company failed to report transactions from darknet marketplaces like AlphaBay, Agora, and Silk Road 2. Fortunately for the exchange, it cooperated with FinCen and other US financial watchdogs during their investigations. Thus, Bittrex will only have to pay about $5 million to FinCen as the enforcement agency would offset the remaining $24.3 million to OFAC since it is an overlapping investigation.
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