![]() In 2018, the company required users to verify the country in which they were located, but did not independently confirm the self-reported information. To open an account, BitGo initially required that new users provide only a name and email address. The alleged violations involved BitGo processing 183 transactions for individuals located in Crimea, Cuba, Iran, Sudan and Syria, totaling $9,127.79. On December 30, 2020, OFAC announced a $98,830 settlement with BitGo, a digital asset and security company that offers a non-custodial, secure digital “hot wallet” service that allows users to send digital currency to other wallets via public blockchain. According to OFAC, this failure enabled customers in sanctioned jurisdictions to use virtual currency on BitPay’s platform and pay, collectively, $129,000 to merchants in the United States and other countries. In particular, it failed to use data available to the company about the IP addresses of customers making purchases through the service to identify persons conducting the transactions from sanctioned jurisdictions. Although BitPay screened participating merchants against OFAC sanctions lists and conducted other diligence to ensure that they were not located in sanctioned jurisdictions, it failed to do the same with its merchants’ customers. The alleged violations involved 2,102 transactions between June 10, 2013, and September 16, 2018, including violations of jurisdictional sanctions against Crimea, Cuba, North Korea, Iran, Sudan and Syria. On February 18, 2021, OFAC announced a $507,375 settlement with BitPay, a cryptocurrency payment service provider that provides participating merchants the ability to have their customers pay with virtual currency through BitPay’s platform and the merchants receive fiat currency. Together, these settlements and investigation suggest a concerted effort by OFAC to remind virtual currency businesses of their OFAC obligations and to encourage broader implementation of appropriate compliance programs. ![]() The BitGo and Bit Pay settlements involved failures to use Internet Protocol (IP) location data to detect transactions with persons in sanctions jurisdictions (in addition to other alleged failures in the case of BitGo), and build on previous guidance that OFAC has provided to money transmitters (which includes many virtual currency businesses) about its expectation that they will use such services to aid compliance with sanctions. sanctions, and that the case remains pending under OFAC’s review. Separately, Coinbase Global Inc., (Coinbase) the largest virtual currency exchange in the U.S., has disclosed that its services may have been used in violation of U.S. (BitGo), for alleged sanctions violations. Department of the Treasury’s Office of Foreign Assets Control (OFAC) recently announced settlements with two virtual currency service providers, Bit Pay, Inc. OFAC's First Enforcement Actions Against Digital Currency Service Providers
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