On October 11, 2022, the U.S. Department of the Treasury’s Office of Foreign Assets Control and Financial Crimes Enforcement Network announced related enforcement settlements with Bittrex, Inc., a U.S.-based digital asset exchange and hosted wallet services company, to settle violations of U.S. sanctions and the Bank Secrecy Act and related regulations, respectively.
The OFAC Settlement, the largest of OFAC’s digital asset-related enforcement actions to date, and the FinCEN Consent Order collectively result in the Company paying a civil penalty of approximately $30 million. Following OFAC’s release of its “Sanctions Compliance Guidance for the Virtual Currency Industry” (which we wrote about here) and recent revelations regarding prosecution by the U.S. Department of Justice of digital asset-related U.S. sanctions violations (which we wrote about here), this joint OFAC-FinCEN enforcement action illustrates the U.S. government’s continued focus on the digital asset industry’s compliance with U.S. sanctions and the potentially significant penalties parties can face for U.S. sanctions and BSA violations.
The joint enforcement action also serves as a reminder of the overlapping jurisdictions of OFAC and FinCEN regarding matters such as customer due diligence and transaction monitoring. In particular, this action highlights the importance for digital asset service providers of carefully evaluating the full scope of potential compliance-related data available to them, and implementing sanctions and anti-money laundering controls, during early-stage product development.
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