Poloniex LLC, a U.S. entity previously affiliated with the Poloniex crypto exchange, will remit $7.59 million to settle sanctions violations allegations with the U.S. Treasury Department's Office of Foreign Asset Control (OFAC), the sanctions watchdog said Monday.
The platform had nearly 66,000 violations of various sanctions programs, allowing customers from Crimea, Cuba, Iran, Sudan and Syria to trade up to a collective $15 million between January 2014 and November 2019, OFAC said in a press release.
While Poloniex launched in January 2014, it did not have a sanctions compliance program in place until May 2015. The compliance program was also not retroactive, allowing customers from sanctioned jurisdictions who were already on the platform to continue using it, a Treasury document said.
"Although Poloniex made efforts to identify and restrict accounts with a nexus to Iran, Cuba, Sudan, Crimea and Syria pursuant to its compliance program, certain customers apparently located in these jurisdictions continued to use Poloniex’s platform to engage in online digital asset-related transactions," OFAC said.
The Poloniex exchange is currently owned by a consortium of entities, which includes backing from Tron creator Justin Sun. Prior to that, U.S. crypto company Circle briefly owned Poloniex, though it sold the business after less than two years. Poloniex LLC appears to be the remaining U.S. legal entity after the sale of the exchange business.
Last year, the Poloniex exchange and fellow crypto exchange Huobi announced they would form a "strategic partnership" that would include boosting Huobi Token "ecosystem development." Sun is also an adviser to Huobi.
OFAC said in its report Monday the fact that Poloniex LLC "was a small startup at the time of most of the" alleged violations, and that Circle improved Poloniex's sanctions compliance program during its time owning the company were both mitigating factors in calculating how severe the penalty would be.
Both Circle and Poloniex cooperated with OFAC, which was another point in the exchange's favor, OFAC said.
A Poloniex spokesperson did not immediately return a request for comment.
CORRECTION (May 1, 2023, 19:30 UTC): Clarifies the entities involved.
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