# Poloniex to Pay $7.59 Million in Sanctions Violations: A Look at the Case
Cryptocurrency exchange company Poloniex has recently received a penalty from the Office of Foreign Asset Control (OFAC) of the US Treasury Department. The company has been accused of violating several foreign sanctions, and the IRS has issued a fine of $7.59 million. In this article, we will take a closer look at the issue, its implications and how it affects the wider cryptocurrency market.
## What Happened?
According to the OFAC, Poloniex was involved in almost 66,000 violations of various international sanctions programs. The sanctions were aimed at countries such as Cuba, Iran, Sudan, Syria, and the Crimea. The company was accused of facilitating customer trades from these countries without proper compliance and due diligence checks. It was also disclosed that these trades amounted to nearly $15 million.
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Poloniex has been in operation since 2014, but it was only in 2015 that the company launched a program aimed at complying with international sanctions. This program, however, did not have a retrospective application, meaning that customers from sanctioned countries could still use Poloniex without facing any restrictions.
## Penalties Imposed
The OFAC has imposed a hefty fine of $7.59 million on Poloniex for its violations. Though the fine may not appear large compared to the total volume of sanctioned trades, it still constitutes a significant sum of money. This penalty may set a precedent for the crypto industry, as more regulatory agencies can follow suit if they perceive that exchanges are not strictly complying with international sanctions.
## Insufficient Efforts
While Poloniex made efforts to identify and limit accounts related to different sanctioned countries, these were deemed insufficient by the OFAC. Despite the exchange’s measures to comply with its obligations, it continued to attract customers from these regions for cryptocurrency trading. This incidence highlights the importance of compliance checks and the need for exchanges to take proactive measures to identify and limit the activities of customers who are suspected of violating sanctions.
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## Poloniex’s Ownership
Currently, Poloniex is owned by a consortium of companies supported by Justin Sun, the founder of Tron (TRX). Prior to this, the US-based cryptocurrency firm Circle owned Poloniex. The exchange has not issued an official statement addressing the fine.
## Conclusion
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The Poloniex case reinforces the need for crypto exchanges to comply with international sanctions, and to take strict measures to limit their customers’ activities. As more regulatory bodies monitor the crypto space, it is essential for exchanges to comply with any imposed regulations and avoid hefty penalties. Ultimately, it is necessary for the crypto industry as a whole to maintain a positive track record of compliance to achieve greater adoption and recognition.