The sanctions watchdog, the U.S. Treasury Department's Office of Foreign Assets Control (OFAC), said on Monday that cryptocurrency exchange Poloniex will pay $7.59 million to settle allegations of sanctions violations.
OFAC Says Justin Sun's Poloniex Exchange Serves Clients from Sanctioned Territories
OFAC said in a press release that the Justin Sun-affiliated platform violated various sanctions programs approximately 66,000 times, allowing customers from Crimea, Cuba, Iran, Sudan and Syria to collectively transact up to $15 million between January 2014 and November 2019.
Although Poloniex became operational in January 2014, it did not have an enforcement compliance program until May 2015. In the published Treasury document, it was stated that the compliance program is not retroactive and that customers in sanctioned regions who are already on the platform are allowed to continue using the platform.
OFAC said, “Although Poloniex makes efforts to identify and restrict accounts linked to Iran, Cuba, Sudan, Crimea and Syria under its compliance program, some customers in these countries apparently use Poloniex's platform to transact online digital assets. He continued to use it.
Poloniex is currently owned by a consortium of organizations that includes support from Tron founder Justin Sun. Prior to that, US crypto firm Circle briefly owned Poloniex, but sold the business less than two years later.
OFAC said in its report Monday that Poloniex was a "small startup" at the time it committed most of the alleged violations, and that Poloniex's development of its sanctions compliance program during Circle's ownership of the company were mitigating factors in calculating how severe the penalty would be.
*Not investment advice.