CoinList to Pay OFAC $1.2 Million in Settlement Over Allegations of Violating Sanctions

Cryptocurrency exchange and token listing platform CoinList agreed to pay the Office of Foreign Assets Control (OFAC) of the United States Department of Treasury over $1.2 million in settlement relating to violations of the agency’s Russia/Ukraine sanctions.

According to OFAC, while CoinList mostly abided by several compliance measures, the platform still opened accounts for users resident in Russia with Crimea addresses.

OFAC Says CoinList Sanctions Violations ‘Non-Egregious’

In an enforcement release on Dec. 13, 2023, OFAC claimed that CoinList processed 989 financial transactions for 89 users between April 2020 and May 2022, who, upon account opening, provided addresses in Crimea, with most of them filling in Russia as their country of residence.

Crimea, which is widely recognized as Ukraine territory, has been annexed by Russia since 2014. Russia is currently facing various international sanctions imposed by the United States and other major economies since its invasion of Ukraine.

As stated in the release, the number of transactions processed over two years for Crimea users was worth $1,252,280, with OFAC stating that “there is no indication the transactions would have been licensable or involved humanitarian activity.”

OFAC, meanwhile, claimed that CoinList knew or should have known that it was offering services to customers living in Crimea, adding that the platform “failed to exercise due caution or care for its sanctions compliance obligations when it failed to institute internal controls able to flag accounts whose owners described themselves as residents of Crimea.”

OFAC further described CoinList’s violations as “non-egregious,” stating that the maximum fine for such monetary valuations is over $327 million. However, the crypto exchange fined $1,207,830 in a settlement payment.

According to the government agency, CoinList was not slammed with the maximum penalty fine because it cooperated with investigations, was not guilty of any previous violations in five years, and the transaction involved in the recent violation was small compared to its annual total transaction volume.

CoinList Takes Remedial Measures Following OFAC Violations

Following the violations, CoinList made adjustments, which included IP geo-blocking to prevent potential users with IP addresses from sanctioned jurisdictions from accessing the platform.

The firm also upgraded its filter settings to automatically detect and reject Crimea residents, while further hiring more experienced compliance personnel. In addition, CoinList will invest $300,000 “in additional sanctions compliance controls” as part of the settlement with OFAC.

CoinList, founded in 2017, reached a valuation of $1.5 billion in 2021 after raising $100 million in Series A funding. The crypto exchange in November 2022 refuted bankruptcy rumors, stating that the company was not experiencing a liquidity crunch after users complained that they could not withdraw for over a week.