In a significant development for the cryptocurrency world, CoinList, a U.S.-based exchange, has reached a settlement of $1.2 million with the Treasury’s Office of Foreign Assets Control (OFAC). The agreement stems from allegations that the platform facilitated transactions in violation of sanctions.
In an official notice dated December 13, OFAC revealed that CoinList processed a total of 989 transactions for users in Crimea, the disputed peninsula currently under Russian occupation. The period under scrutiny spans from April 2020 to May 2022. While OFAC categorized the violations as “non-egregious,” it noted that CoinList did not voluntarily disclose the infractions.
Screening Oversight and Address Discrepancies
OFAC’s investigation highlighted a flaw in CoinList’s screening procedures. The exchange failed to identify users who, despite claiming residence in a non-embargoed country, provided addresses within Crimea. Specifically, CoinList opened 89 accounts for customers who stated ‘Russia’ as their country of residence but registered addresses in Crimea during account setup.
OFAC emphasized that CoinList either knew or should have known that these transactions likely involved residents of Crimea, thus breaching U.S. sanctions and contributing to the economic benefit of the region. Despite the oversight, the agency acknowledged CoinList’s cooperation with U.S. officials. Importantly, the volume of transactions violating sanctions constituted only a small percentage of the exchange’s overall activity.
Historical Context and Industry Precedents
The geopolitical backdrop adds depth to this incident. Crimea was annexed by Russian forces in 2014, prompting sanctions from then-U.S. President Barack Obama. The situation escalated in 2022 when Russia invaded Ukraine, leading to additional sanctions.
CoinList is not alone in facing enforcement actions. Earlier in the year, Poloniex settled for $7.6 million over 65,000 apparent violations, including those related to Crimea. Binance, a major player in the crypto sphere, also concluded a $4.3-billion settlement with U.S. authorities, addressing allegations of money laundering and fraud alongside apparent sanctions violations.
Industry Scrutiny and Ongoing Compliance
The crypto industry continues to navigate increased regulatory scrutiny, with OFAC actively enforcing sanctions-related compliance. CoinList’s case serves as a reminder for other U.S. crypto firms, urging them to bolster their screening procedures and compliance measures to avoid similar pitfalls. As the landscape evolves, the adherence to regulatory standards becomes paramount for the sustained growth and legitimacy of the cryptocurrency sector.
