Bittrex, Inc. is a company based in Bellevue, Washington that provides an online virtual currency exchange and hosted wallet services. The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) alleged that Bittrex violated programs for sanctions against Cuba, Iran, Sudan, and Syria, as well as Ukraine-related.
More specifically, according to OFAC, Bittrex failed to prevent persons apparently located in the sanctioned jurisdictions from using its platform to engage in over $263 million worth of virtual currency-related transactions. The applicable sanctions programs generally prohibited U.S. persons from engaging in transactions with these jurisdictions. Based on internet protocol (“IP”) address information and physical address information collected about each customer at onboarding, Bittrex had reason to know that these users were located in jurisdictions subject to sanctions. At the time of the transactions, however, Bittrex was not screening this customer information for terms associated with sanctioned jurisdictions.
There was no voluntary self-disclosure in this case. Bittrex agreed to remit $24.3 million to OFAC to settle its potential civil liability for 116,421 apparent violations of multiple sanctions programs.
The U.S. Financial Crimes Enforcement Network (FinCEN) also investigated Bittrex. It found that, from February 2014 through December 2018, Bittrex failed to maintain an effective anti-money laundering (AML) program. This included deploying inadequate and ineffective transaction monitoring on its platform resulting in significant exposure to illicit finance. Further, Bittrex’s AML program failed to appropriately address the risks associated with the products and services it offered, including anonymity-enhanced cryptocurrencies. Bittrex failed to file any Suspicious Activity Reports (SARs) between February 2014 and May 2017. Bittrex also failed to file SARs on a significant number of transactions involving sanctioned jurisdictions, including transactions that were suspicious above and beyond the fact that they involved a sanctioned jurisdiction.
Under a Consent Order, Bittrex agreed to remit $29.3 million for its willful violations of the Bank Secrecy Act’s AML program and SAR requirements. FinCEN will credit against this amount the payment of the OFAC settlement.
This is OFAC’s largest virtual currency enforcement action to date. It also represents the first parallel enforcement actions by FinCEN and OFAC in this space.