The US Treasury has settled with BitGo, an institutional crypto custodian service and wallet operator, over charges that it facilitated users in sanctioned areas to transact using its crypto wallet services between 2015 and 2019.
It has been reported by the Treasury’s Office of Foreign Asset Controls (OFAC) that BitGo did not do due diligence in blocking wallet users based in Crimea, Cuba, Iran, Sudan, and Syria.
“BitGo failed to exercise due caution or care for its sanctions compliance obligations when it failed to prevent persons apparently located in sanctioned jurisdictions to open accounts and send digital currencies via its platform as a result of a failure to implement appropriate, risk-based sanctions compliance controls.”
However, the Treasury wrote that there were 183 “apparent violations” of its various sanctions programs by adding up to just over $9,000 in transactions. They retain the status of “apparent” as the accusations are based on the IP addresses from which users accessed BitGo hot wallets.
In mitigating factors, the Treasury said:
“BitGo screens all accounts, including “hot wallet” accounts, against OFAC’s Specially Designated Nationals and Blocked Persons List, including blocked cryptocurrency wallet addresses identified by OFAC.”
Likewise, the settlement will cost BitGo $98,830. Given the hawkishness of OFAC’s programs, the settlement is relatively lenient, even though the actual value transacted was less than 10% of the fine.
The civil penalty, had the case gone to court, would have been between $183,000 and $53 million.
Thus, the report stated:
“This action highlights that companies involved in providing digital currency services — like all financial service providers — should understand the sanctions risks associated with providing digital currency services and should take steps necessary to mitigate those risks.”