Poloniex, a digital currency exchange platform founded in January 2014, has reached a $7.59 million settlement with the Office of Foreign Assets Control (OFAC), an agency of the United States Department of the Treasury, regarding sanctions violations. According to OFAC, Poloniex had almost 66,000 such violations between January 2014 and November 2019. Customers from some of the sanctioned countries such as Crimea, Iran, Cuba, Sudan and Syria conducted transactions on the platform, with a total amount of up to $15 million, though Poloniex had implemented a compliance program in May 2015 which was not retroactive upon existing customers from these countries.
Poloniex had enough KYC (know-your-customer) information and IP address data of their customers for a long time and even started to ban the IP addresses from these sanctioned countries in 2017, however, their compliance program fell short in terms of identifying and restricting accounts with such links to these countries. To address the issue, the platform enforced limits by the end of 2017, which saw a steep decrease in transgressions.
In February 2018, Circle, an American financial services company, purchased Poloniex before offloading it to newer owners in 2019. With the transition, new regulations were imposed on the platform, which managed to stay popular with acceptable volumes on its trades. Furthermore, they included additional capabilities in their trading services.
In August 2021, Poloniex reached a $10.4 million settlement with the United States Securities and Exchange Commission for operating an unregulated digital currency exchange, and prior to this, in May 2021, the Ontario Securities Commission (OSC) had initiated action against the organization.
Cryptocurrency is a volatile sector and platforms such as Poloniex are subject to compliance regulations. Failing to do so can have dire consequences which could even result in the closure of the platform. Therefore, it is important for institutions in the sector to make sure that customers comply with all applicable regulations and laws. It is for this reason that exchanges should prioritize their compliance efforts and actively monitor their customers to avoid negative sanctions from regulatory authorities.
Jaxon Chavez
- 2023-05-02
Poloniex Facing Sanctions for Violations
Poloniex, a digital currency exchange platform founded in January 2014, has reached a $7.59 million settlement with the Office of Foreign Assets Control (OFAC) for sanctions violations. The platform was found to have failed to identify and restrict accounts related to sanctioned countries, such as Crimea, Iran, Cuba, Sudan, and Syria.
