Poloniex Settles Sanctions Violations Charges for $7.59 Million

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  • Poloniex has resolved its dispute with the CFTC over alleged sanctions violations with a $7.59 million settlement
  • The exchange was accused of having improper systems in place to prevent customers in sanctioned countries from using its platform
  • The CFTC took its improved compliance efforts in recent years into account

Poloniex LLC, a former affiliate of the Poloniex cryptocurrency exchange in the United States, has agreed to pay $7.59 million to settle allegations of violating sanctions with the Office of Foreign Asset Control (OFAC). According to OFAC, the platform committed almost 66,000 violations of various sanctions programs, allowing customers from sanctioned jurisdictions including Crimea, Cuba, Iran, Sudan, and Syria to trade up to a collective $15 million between January 2014 and November 2019.

Poloniex Started With No Sanctions Controls

Poloniex launched in January 2014, but according to OFAC it did not have a sanctions compliance program in place for another 15 months. When it was put in place, the program did not apply retroactively, which allowed customers from sanctioned jurisdictions who were already on the platform to continue using it. OFAC acknowledged that by 2017 Poloniex had introduced controls that considerably reduced the rate of additional violations.

These controls were significantly increased when Circle acquired Poloniex in 2018, with the new owners introducing additional internal sanctions compliance controls that significantly reduced the rate of further violations. Poloniex sold its Poloniex Trading Platform to a consortium of entities including Tron creator Justin Sun, with Poloniex LLC seeming to be the last remaining vestige of the platform connected to the U.S., although it currently has no business operations or employees.

Not Great, but Better Than Some

The $7.59 million fine handed to Poloniex is much less than the $29 million inflicted on Bittrex last October, with the CFTC taking into account the former’s efforts to improve its compliance over the years whereas Bittrex was accused of “willful violations of the Bank Secrecy Act’s anti-money laundering and suspicious activity report reporting requirements.”