![]() This action highlights the need for companies dealing in cryptocurrency to evaluate their sanctions risk and implement an effective sanctions compliance program. Companies that facilitate or engage in online commerce or process transactions using digital currency are responsible for ensuring that they do not engage in unauthorized transactions prohibited by OFAC sanctions, such as dealings with blocked persons or property, or engaging in prohibited trade or investment-related transactions. This action highlights that companies involved in providing digital currency services-like all financial service providers-should understand the sanctions risks associated with providing digital currency services and should take steps necessary to mitigate those risks. OFAC used the BitPay settlement press release to reiterate this expectation that companies dealing in cryptocurrency take active measures to avoid facilitating transactions that violate sanctions: The BitPay action is consistent with prior OFAC guidance stating that the compliance obligations for transactions involving “traditional fiat currency” fully apply to “digital currencies” as well. Coinbase Global Inc., a major cryptocurrency exchange, recently reported receiving multiple OFAC subpoenas in its 10-K annual report in connection with suspicious cryptocurrency transactions. Other cryptocurrency companies have publicly reported an uptick in OFAC subpoenas. The BitPay settlement comes less than two months after OFAC announced a $98,000 settlement agreement with BitGo Inc., a cryptocurrency wallet management company, to resolve similar allegations. The settlement reflects a trend in OFAC enforcement of holding cryptocurrency companies accountable for failing to prevent sanctions violations by third parties using their services. Rather, OFAC alleged that BitPay had inadequate due diligence and internal controls policies in place which failed to identify potential sanctions violations. Significantly, OFAC did not allege that BitPay knowingly violated sanctions laws or took steps to actively conceal violations. (“BitPay”), a major cryptocurrency payment processing platform, entered into a $507,000 settlement with the Office of Foreign Asset Control (“OFAC”), to settle allegations that it processed cryptocurrency payments which violated various US sanctions programs.
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