A first-ever criminal case has been filed by the Department of Justice against an American citizen who used cryptocurrency to bypass U.S. sanctions. “The payments platform advertised its services as designed to evade U.S. sanctions, including through purportedly untraceable virtual currency transactions.”
DOJ charges US Citizen with Crypto Sanctions Evasion.
A judicial opinion document by U.S. Magistrate Zia M. Faruqui on Friday stated that the U.S. Justice Department filed its first criminal complaint against American citizens who tried to circumvent American sanctions with cryptocurrency. This case remains sealed.
Judge Faruqui explained why he approved the DOJ’s criminal complaint against the American citizen accused of transmitting more than $10 million worth of bitcoin to a crypto exchange in a comprehensively sanctioned country. At the moment, comprehensive sanctions are in place against Cuba, Iran. North Korea, Syria and regions like Crimea, Donetsk or Luhansk.
The U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) has imposed fines against crypto exchange platforms for violating sanctions laws. The judge clarified:
The Department of Justice can and will criminally prosecute individuals and entities for failure to comply with the OFAC’s regulations, including as to virtual currency.
The DOJ alleged that the defendant, a U.S. citizen, used an IP address in the U.S. “to conspire to operate an online payments and remittances platform” based in a comprehensively sanctioned country. Justice Department stated:
This payments platform claimed that it was designed to get around U.S. Sanctions, such as through virtual currency transactions.
To buy and sell Bitcoin, the defendant opened an account at a U.S.-based crypto exchange. The defendant then used this crypto exchange account to transmit over 10 million dollars worth of BTC between the U.S. and sanctioned countries for the platform’s customers. According to DOJ, this was a conspiracy by the defendant to breach the International Emergency Economic Powers Act, (IEEPA), and defraud United States.
The judge further noted: “The question is no longer whether virtual currency is here to stay … but instead whether fiat currency regulations will keep pace with frictionless and transparent payments on the blockchain.”
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