OFAC Levies $7.59 Million Penalty on Poloniex

Poloniex Faces Penalty for Sanctions Violations

The U.S. Department of Treasury's Office of Foreign Assets Control (OFAC) has imposed a $7.59 million fine on Poloniex, a California-based crypto exchange. This penalty is part of a settlement for alleged violations of multiple sanctions programs.

Allegations Against Poloniex

Between January 2014 and November 2019, Poloniex reportedly allowed users from sanctioned regions, including Crimea, Cuba, Iran, Sudan, and Syria, to conduct transactions. These users allegedly traded, deposited, and withdrew over $15.3 million. Despite having access to customer location data through know-your-customer (KYC) protocols and IP addresses, Poloniex failed to screen and block users from these regions.

Corrective Measures by Poloniex

In response to the allegations, Poloniex began implementing measures to block IP addresses from sanctioned areas starting in June 2017. Earlier, in May 2015, the exchange had initiated a sanctions compliance program requiring KYC reviews for customers in jurisdictions under OFAC sanctions.

OFAC's Penalty Assessment

According to OFAC's Economic Sanctions Enforcement Guidelines, the penalty could have exceeded $99 million. However, the final settlement amount reflects OFAC's assessment that Poloniex's violations were neither voluntary self-disclosures nor egregious.

This settlement clears Poloniex of potential civil liabilities related to these allegations, closing a chapter on the compliance challenges faced by the crypto exchange.