Poloniex, a cryptocurrency trading platform with ties to Tron founder Justin Sun, has agreed to pay a $7.59 million settlement to the U.S. Treasury Department's Office of Foreign Asset Control (OFAC) after allegedly violating multiple sanctions programs.
According to OFAC's announcement on May 1, #Poloniex was involved in nearly 66,000 breaches, which allowed customers from Crimea, Cuba, Iran, Sudan, and Syria to conduct trades worth approximately $15 million between January 2014 and November 2019.
Although Poloniex began operations in January 2014, it didn't establish a sanctions compliance program until May 2015. Furthermore, the program lacked retroactive application, which allowed existing customers from sanctioned regions to maintain access to the platform.
Despite Poloniex's efforts to detect and limit accounts associated with sanctioned regions, OFAC reported that some individuals continued to engage in digital asset transactions on the platform.
Poloniex is currently owned by a group of entities, including #JustinSun , and was briefly owned by American crypto company Circle. Last year, Poloniex and crypto exchange Huobi announced a "strategic partnership" aimed at advancing the #Huobi Token "ecosystem development." Sun also holds an advisory role with Huobi.
When determining the penalty's severity, OFAC took into account mitigating factors such as Poloniex's small startup nature during most of the alleged violations and Circle's initiative to enhance the sanctions compliance program while in control of the company. The cooperation of both Circle and Poloniex with OFAC throughout the investigation also played a role in the reduced penalty imposed on the cryptocurrency exchange.
Poloniex's settlement is a stark reminder to all crypto companies to maintain adequate compliance programs to avoid running afoul of the U.S. Treasury Department's regulations.
