Poloniex, a popular cryptocurrency exchange platform, has agreed to pay $7.6 million to the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) for violating sanctions in Cuba, Iran, Sudan, and Syria. OFAC found that Poloniex allowed customers in these countries to trade and transact more than $15.3 million of digital currencies through nearly 66,000 transactions between January 2014 and November 2019.
Although Poloniex had sufficient know-your-customer (KYC) information and IP address data to know that sanctions violations were taking place, the exchange did not begin blocking prohibited IP addresses until 2017, despite monitoring IP addresses and collecting KYC information data beginning in 2015. OFAC acknowledged that Poloniex added restrictions by late 2017, which “began to substantially reduce” violations.
Poloniex’s Previous Controversies
This is not the first time Poloniex has faced regulatory action. In August 2021, the U.S. Securities and Exchange Commission (SEC) determined that Poloniex operated an unregistered digital currency exchange and reached a settlement of $10.4 million. The Canada’s Ontario Securities Commission (OSC) also took action against the company in May 2021, prior to the SEC settlement.
Despite these controversies, Poloniex remains a popular exchange with a moderately high volume, handling $59 million in trading volume over the past 24 hours. The platform has also added new trading features in recent months. Poloniex is currently owned by a group of investors that includes Justin Sun, the founder of TRON and an advisor to the competing exchange Huobi.
In today’s settlement, OFAC determined the amount based on the fact that Poloniex’s violations were “not voluntarily self-disclosed” and were “non-egregious.” The regulator noted that Circle acquired Poloniex in February 2018 before selling it in 2019, and that the brief acquisition resulted in additional controls on Poloniex’s exchange.