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Enforcement Release: May 1, 2023
OFAC Settles with Poloniex, LLC for $7,591,630 Related to Apparent Violations of Multiple Sanctions Programs
Poloniex, LLC, a Delaware company with its principal place of business in Boston, Massachusetts that operated an online trading and settlement platform previously doing business as Poloniex Inc. (hereinafter collectively “Poloniex”) has agreed to remit $7,591,630 to settle its potential civil liability for 65,942 apparent violations of multiple sanctions programs. Between January 2014 and November 2019, the Poloniex trading platform allowed customers apparently located in sanctioned jurisdictions to engage in online digital asset-related transactions— consisting of trades, deposits, and withdrawals—with a combined value of $15,335,349, despite having reason to know their location based on both Know Your Customer information and internet protocol address data. The settlement amount reflects OFAC’s determination that Poloniex’s apparent violations were not voluntarily self-disclosed and were not egregious.
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1) The Poloniex, LLC case is one of many in a string of enforcement cases targeting internet based cryptocurrency exchangers (though this entity deals in cryptocurrency and other assets). Compare Uphold HQ Inc., Payward, Inc. d/b/a Kraken, Bittrex, Inc., BitPay, Inc and BitGo, Inc. The basis for liability is generally the same throughout, i.e. an internet money-related service provider provides services to persons presumed to be "in" or ordinarily resident in sanctioned areas based on Know Your Customer information and internet protocol address data (here both are cited).
2) FOREIGN COMPANY LIABILITY FOR VIOLATIONS OF U.S. SUBSIDIARIES IN THE ABSENCE OF “CONSPIRACY” OR “CAUSING” ALLEGATIONS
The Poloniex case appears to break no new ground as it relates to diligence expectations or legal bases for liability, but there is one aspect of the case that appears to be wholly novel for...