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US Authorities Fines Bitgo for Permitting Customers to Bypass Sanctions With Cryptocurrency

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The U.S. Bureau of Foreign Wealth Control has fined Bitgo for not preventing users in sanctioned countries from using its crypto wallet service. The agency says Bitgo processed 183 cryptocurrency transactions that were “blatant violations of multiple sanction programs.”

Treasury Department claims Bitgo allows users to evade sanctions

The US Treasury Department announced on Wednesday that the Office of Foreign Wealth Control (OFAC) has reached a settlement with Bitgo for $ 98,830 “for 183 apparent violations of multiple sanction programs.” Bitgo offers cryptocurrency wallet services. According to the announcement:

Bitgo was unable to prevent people who appear to be in the Crimean region of Ukraine, Cuba, Iran, Sudan and Syria from using its unsecured secure digital wallet management service.

“Bitgo had reason to believe that these users were in sanctioned jurisdictions based on Internet Protocol (IP) address data associated with devices used to log in to the Bitgo platform,” it says Announcement.

OFAC claims that Bitgo’s “sanctions compliance procedures” were flawed and claims that Bitgo did not implement controls at the time of the transactions to prevent such users from accessing its services. In addition, OFAC noted that Bitgo did not voluntarily disclose the apparent violations itself and that the apparent violations were not a monstrous case.

The 183 cryptocurrency transactions processed by Bitgo totaled $ 9,127.79 and occurred roughly between March 10, 2015 and December 11, 2019.

“People in Crimea, Cuba, Iran, Sudan and Syria have signed up for ‘hot wallet’ accounts and accessed Bitgo’s online platform to conduct transactions in digital currencies,” OFAC said. The agency went on to explain that Bitgo tracked users’ IP addresses for security reasons, but did not use the information for sanction compliance purposes.

Bitgo implemented an OFAC sanctions compliance policy after learning of its apparent violations in early 2020. The company “said it invested in significant corrective actions in response to the apparent violations.” This includes hiring a Chief Compliance Officer and implementing a new OFAC policy that now applies to all Bitgo services. OFAC found that now:

Bitgo checks all accounts, including hot wallet accounts, against OFAC’s list of specially designated nationals and blocked people, including blocked cryptocurrency wallet addresses identified by OFAC. Bitgo also did a retroactive batch screen of all users.

What do you think of Bitgo breaking US sanctions programs? Let us know in the comments below.

Photo credit: Shutterstock, Pixabay, Wiki Commons

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