Cryptocurrency platform Coinbase disclosed certain of its transactions are “under review” by the Department of the Treasury’s Office of Foreign Assets Control (OFAC) for potential violations of U.S. sanctions laws.
The acknowledgement came in a regulatory filing with the Securities and Exchange Commission as Coinbase seeks to go public via direct listing. There is no indication whether OFAC has identified any apparent violations.
“From time to time, we have submitted voluntary disclosures to OFAC or responded to administrative subpoenas from OFAC that have identified such transactions,” Coinbase stated. “To date, none of those proceedings has resulted in a monetary penalty or other adverse action.”
Coinbase need not look hard to find examples of cryptocurrency platforms running afoul of the regulator. In fact, two of OFAC’s most recent penalties have come against two of its peers. BitGo was fined $98,830 for 183 apparent violations of multiple sanctions programs in December, and BitPay agreed to pay $507,375 to settle its liability for 2,102 apparent violations last month.
In both cases, the apparent violations related to individuals in the sanctioned regions of Crimea (Ukraine), Cuba, Iran, Sudan, and Syria allegedly accessing the digital currency platforms. The BitPay case also appeared to include transactions from North Korea. Both cases were deemed “non-egregious.”
“Companies that facilitate or engage in online commerce or process transactions using digital currency are responsible for ensuring that they do not engage in unauthorized transactions prohibited by OFAC sanctions, such as dealings with blocked persons or property, or engaging in prohibited trade or investment-related transactions,” the regulator stated in both cases.
In its filing, Coinbase notes it has “shared key particulars of our compliance program with OFAC” and that it believes it has “a reasonable risk-based program in place.” The company stated it monitors IP addresses to “identify prohibited jurisdictions and of blockchain addresses that have either been identified by OFAC as prohibited or that otherwise are believed by us to be associated with prohibited persons or jurisdictions.” In the BitGo and BitPay penalties, it was noted each company had access to similar IP information that should have prevented the apparent violations.