The Office of Foreign Assets Control (OFAC) has reached a settlement with Poloniex for $7.6 million regarding various sanctions violations. Poloniex allowed customers in sanctioned countries to trade and transact over $15.3 million of digital currencies through 66,000 transactions between January 2014 and November 2019.
The violations took place in Cuba, Iran, Sudan, and Syria, and Poloniex had sufficient KYC information and IP address data to know the sanctions violations were occurring. Despite monitoring IP addresses and collecting KYC data beginning in 2015, Poloniex did not start blocking prohibited IP addresses until 2017. OFAC noted that Poloniex added restrictions by late 2017, which “began to substantially reduce” violations.
This is not the first time regulators have taken action against Poloniex. The U.S. Securities and Exchange Commission (SEC) previously settled with Poloniex in August 2021 for $10.4 million over operating an unregistered digital currency exchange. Also, Canada’s Ontario Securities Commission (OSC) took action against the company in May 2021 before the SEC settlement.
Despite the controversies, Poloniex remains a popular exchange with a moderately high volume. The platform has recently added new trading features and handled $59 million in trading volume over the past 24 hours. Currently owned by a group of investors, including Justin Sun, founder of TRON and advisor to the competing exchange Huobi.