OFAC Fines BitPay $500,000 For Violating US Sanctions

OFAC fined BitPay $500k on allegations it allowed individuals in sanctioned locations to transact with people in the US, in apparent violation of US sanctions law.

February 19, 2021 | AtoZ MarketsCryptocurrency payment company BitPay has settled claims with the Office of Foreign Assets Control (OFAC) and will pay a $500,000 fine for violating US sanctions.

According to the notice, BitPay will pay a $507,375 fine for facilitating transactions between US citizens and individuals in regions under US sanctions (Crimea, Cuba, North Korea, Sudan, Iran, and Syria). According to the US Treasury Department, in the period from 2013 to 2018, similar transactions were carried out in cryptocurrencies for $129,000.

OFAC says BitPay deliberately facilitated over 2,100 transactions

According to OFAC, the company knew it was facilitating transactions between persons in the sanctioned regions because it had location and IP address information.

BitPay could face a maximum fine of over $600 million under the allegations, but OFAC took into account some mitigating factors: BitPay's enforcement of law enforcement, employee training, launching an identity service, blocking IP addresses in sanctioned regions, and a number of other steps. to prevent such transactions in the future. BitPay partnered with OFAC while the agency investigated violations.

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“BitPay did not exercise due caution or care about its sanctions obligations when it allowed individuals in authorized jurisdictions to transact with BitPay sellers using digital currency for approximately five years, despite the fact that BitPay had sufficient information to verify these customers ", Says OFAC.

The notice states that cryptocurrency companies must comply with OFAC rules and monitor possible sanctions risks. The regulator has issued guidelines that companies can use to do this. In a statement, a BitPay spokesman said:

“We have worked with OFAC and are happy to resolve this issue. The charges included a small number of transactions (2,102) that took place between our sellers and their customers from 2013 to 2018. The transactions appear to have originated from jurisdictions under US sanctions. These transactions had an average value of less than $ 100, totaling $128,582.61, and were in industries such as online hosting and gaming. OFAC found the violations not flagrant. ”

These transactions accounted for 0.04% of the total transactions conducted during that period, the spokesperson said and the company has since improved its compliance program. As a reminder, OFAC said last fall that paying ransoms to cybercriminals during ransomware attacks could violate US sanctions.

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