- The company committed more than 65,000 violations of different sanctions programs
- Users from Cuba, Crimea, Sudan, Iran, and Syria traded up to $15 million
Poloniex LLC will pay the US Office of Foreign Asset Control (OFAC) a fine of $7.59 million to settle charges of violating sanctions laws, CoinDesk reported.
They accepted users from restricted countries
The company committed more than 65,000 violations of different sanctions programs, allowing users from Cuba, Crimea, Sudan, Iran, and Syria to trade up to $15 million in total between 2014 and 2019, OFAC reported.
Poloniex launched without a sanctions compliance program in January 2014. They didn’t have one until May the following year. The program they set up was not retroactive, so existing users in the above sanctioned jurisdictions could still use it in 2015 and onward.
OFAC said in a statement:
Although Poloniex made efforts to identify and restrict accounts with a nexus to Iran, Cuba, Sudan, Crimea and Syria pursuant to its compliance program, certain customers apparently located in these jurisdictions continued to use Poloniex’s platform to engage in online digital asset-related transactions.
Mitigating factors
On May 1, OFAC stated in a report that extenuating circumstances existed in the case of Poloniex LLC. One of them is that the exchange was a minor startup at the time most of the accusations reference.
US firm Circle owned the platform, but their period of ownership lasted less than two years. Circle improved sanctions compliance policies during their brief tenure.
Circle and Poloniex both cooperated with the financial watchdog, which was another favorable aspect.
Justin Sun holds an ownership share in Poloniex
At the moment, the Poloniex platform is owned by a number of entities, including one associated with the creator of Tron. After the exchange business was sold, Poloniex LLC was the last US legal entity remaining.
Last year, crypto exchange Huobi and Poloniex announced a partnership to develop the ecosystem of the Huobi Token, among other strategies. Sun is among Huobi’s advisers.
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