March 8, 2021

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BitPay to pay $500K in settlement with US Treasury over sanctions violations

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Atlanta, Georgia-based digital currency payments firm BitPay has agreed to pay over $500,000 in settlement over sanction violations. The firm settled with the Office of Foreign Assets Control (OFAC), an agency of the U.S. Treasury Department.

BitPay agreed to pay $507,375 to settle its potential civil liability for the violations. As the OFAC alleges, it allowed users in North Korea, Sudan, Syria, Ukraine, Cuba and Iran to transact on its platform. This is despite having IP addresses and other location data about these users. The OFAC alleges that users in these countries conducted 2,102 transactions, totaling approximately $128,582.

The statutory maximum civil penalty for such a violation is $619 million, the OFAC detailed. The base civil monetary penalty stands at $2.2 million. However, the agency determined that the violations constitute a non-egregious case.

Other mitigating factors that the OFAC considered include that BitPay had implemented due diligence on its platform as far back as 2013. It’s also a small business that hadn’t received a penalty notice in the five years prior to the violation. Additionally, BitPay had cooperated with the regulator and stopped serving sanctioned regions.

The OFAC warned digital currency companies not to think they are exempted from its regulations.

“This action emphasizes that OFAC obligations apply to all U.S. persons, including those involved in providing digital currency services. As part of a risk-based approach, OFAC encourages companies that provide digital currency services to implement sanctions compliance controls commensurate with their risk profile.”

BitPay revealed in a statement that it had fully cooperated with the OFAC and was happy to reach an amicable solution. The transactions from sanctioned regions were also very few in relation to its overall volume, representing just 0.04%. They also had an average value of less than $100 and were mainly for online hosting services and gaming. The company has also improved its compliance programs since then, the statement spelt out.

Earlier this year, yet another digital currency company settled with the OFAC for similar violations. As CoinGeek reported, BitGo paid $94,000 in its settlement for offering services to users in sanctioned regions. However, BitGo had processed a much smaller volume from these regions at just $9,127. Just as with the current case, the OFAC cited BitGo’s cooperation and its small size as the reason it imposed just a fraction of the statutory penalty which stood at $53 million.

See also: CoinGeek Live panel, Regulation of Digital Assets & Digital Asset Businesses

New to Bitcoin? Check out CoinGeek’s Bitcoin for Beginners section, the ultimate resource guide to learn more about Bitcoin—as originally envisioned by Satoshi Nakamoto—and blockchain.





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