Bittrex to pay $30M for sanctions violation

Crypto exchange company Bittrex agreed to pay $30 million for violating federal sanctions set by the U.S. Treasury Department.

The settlement was announced by the U.S. Treasury Department’s Office of Foreign Assets (OFAC) and the Financial Crimes Enforcement Network (FinCEN) on Oct. 11.

The exchange allowed nearly 1,800 people that resided in sanctioned regions, including Iran, Cuba, Sudan, Syria, and Crimea, to conduct over 116,000 transactions. According to the settlement, the total amount transferred equated to $260 million.

In addition to paying the fine, Bittrex also took necessary actions to comply with the existing sanctions.

Cooperative Bittrex gets a discount from OFAC

According to the settlement, Bittrex allowed individuals from sanctioned regions to issue crypto transfers between 2014 and late 2017.

In 2019, the exchange openly stated that it had allowed users from some sanctioned regions like Iran to open accounts on its platform. In the same year, it also froze the accounts of some of these individuals.

Even though the exchange violated the sanctions for three years, OFAC argued that it was a small and new company and had provided substantial cooperation with the investigation. It stated:

“In response to the Apparent Violations, Bittrex swiftly took a series of subsequent remedial measures that significantly curtailed the Apparent Violations, including blocking the IP addresses tied to sanctioned jurisdictions, restricting sanctioned jurisdiction account holders, and using new tools to improve compliance.”

The maximum amount OFAC could have fined Bittrex could be over $35 billion. However, considering it’s in its early years and cooperation, OFAC decided to fine Bittrex only slightly more than $24 million.

FinCEN fines Bittrex $29.8 million

While OFAC was concerned about the fact that Bittrex allowed sanctioned individuals to operate on its platform, FinCEN was focused on the amount of suspicious activity running on the exchange.

According to FinCEN, Bittrex failed to submit its suspicious activity reports (SARs) between 2014 and early 2017. These reports would have included 200 transactions moving over $140,000 worth of crypto and another 22 transactions moving over $1 million.

FinCEN said:

“Bittrex failed to implement effective transaction monitoring on its trading platform, relying on as few as two employees with minimal anti-money laundering training and experience to manually review all of the transactions for suspicious activity, which at times were over 20,000 per day,”

As a result of failing to submit its SARs, FinCEN decided to fine Bittrex $29.8 million. However, it also said that it would credit the exchange’s $24 million fine from OFAC. Therefore, Bittrex got out of the deal by having to pay only $30 million in fines.