On Monday, the Office of Foreign Assets Control announced that Poloniex had allowed customers in Crimea, Cuba, Iran, Sudan, and Syria to engage in digital asset transactions between 2014 and 2019, despite having reason to know the locations of these customers.
Sanctions Violations and Economic Benefits
Poloniex was found to have allowed digital asset trades, deposits, and withdrawals in those regions with assets totaling $15 million. As a result, the exchange conveyed economic benefit to 232 persons in several jurisdictions subject to OFAC sanctions. According to the Treasury document, it harmed the integrity of multiple OFAC sanctions programs.
Poloniex reportedly made efforts to restrict accounts connected to these jurisdictions, but some users in those regions still managed to use the platform. The Department also recognized multiple mitigating factors, including that Poloniex was a small startup at the time of the violations and that the violations represented a tiny fraction of the exchange’s total volume.
In August 2021, Poloniex agreed to pay the Securities and Exchange Commission a $10 million fine for running an unregistered cryptocurrency exchange. The Treasury Department’s report last month also labeled decentralized finance as a national security threat for its potential use in money laundering and sanctions violation.