Crypto exchange Poloniex has agreed to a settlement with the U.S. Treasury Department’s Office of Foreign Asset Control (OFAC).
In a press release shared on Monday, the OFAC announced that Poloniex had agreed to pay a $7.5 million fine to settle a civil liability lawsuit concerning apparent sanctions violations
Poloniex allegedly allowed customers from Crimea, Cuba, Iran, Sudan, and Syria to trade $15 million worth of digital assets on its platform between January 2014 and November 2019.
The OFAC alleged that deficiencies in the exchange’s compliance processes resulted in 65,942 trades being processed for 232 customers located in these sanctioned jurisdictions.
The department claims that Poloniex was aware of the sanctioned users on its platform because of their physical address data and IP address location. However, OFAC determined that certain factors mitigated the exchange’s sanctions violations which brought down the severity of the final penalty imposed.
These factors included an improved compliance policy following Circle’s acquisition of the exchange in 2018, after which the exchange froze user accounts until KYC verification was completed and geolocation restrictions for sanctioned countries.
A group of investors, including Tron founder Justin Sun, purchased Poloniex from Circle in 2019. Last year, Poloniex formed a strategic partnership with Huobi, another crypto exchange with ties to Sun, who denies being the firm’s majority stakeholder.
“This action highlights that online digital asset companies—like all financial service providers— are responsible for ensuring that they do not engage in transactions prohibited by OFAC sanctions, such as providing services to persons in comprehensively sanctioned jurisdictions,” said the department in a statement.