While the SEC is most often engaged in lawsuits against exchanges and other crypto companies, it is not the only regulator monitoring this market. The Office of Foreign Control (OFAC) is another branch of the US Treasury Department that also deals with issues relating to the practice of exchanges. She has just pinned down the company BitGo for violating the sanctions programs in force in its line of business. The latter had no other choice than to pay a fine in order to definitively close this case.
A violation due to the lack of control procedure at BitGo
According to the regulations in force, it is prohibits people who reside in areas such as Crimea, Cuba, Iran, Sudan and Syria from opening accounts with crypto exchanges. If it is impossible for theOFAC to prevent them from doing so, it is up to companies like BitGo to put in place a mechanism for this purpose. The court accuses the company of not have been rigorous in this management with irregularities observed between 2015 and 2019. During this period, BitGo processed 183 crypto transactions for a total of nearly $ 9,130 from the countries mentioned above.
For’OFAC, BitGo had sufficient resources to identify account openings from sanctioned countries. She mentioned in particular the ability to view the IP addresses of these customers, something the company has deliberately chosen not to do. For her part, she did not voluntarily admit her error in reporting these accounts, she will have to pay a fine to the US Treasury Department. The agreement thus concluded with OFAC is quite common in the community, especially for this type of business.
A fine of $ 98,830 and corrective action taken
In the most extreme cases, companies found guilty of violating the sanctions program run the risk of a penalty of $ 53 million. TheOFAC considering that this was not a flagrant violation, BitGo Fined $ 98,830 to Settle Potential Third Party Liability. A decision which also stems from the fact that the company fully cooperated in the investigation with strong commitments. They concern in particular taking corrective measures and recruiting a compliance manager. TheOFAC He also took the opportunity to recall that like other financial service providers, exchanges should take sanctions very seriously.
FinCen could be less lenient on its side in the event of a violation if ever its new bill on crypto wallets had to be validated. The law, which is already provoking outrage in the industry, requires exchanges to report any transaction involving unhosted wallets for an amount greater than $ 3,000.