Digital currency custodial services provider BitGo has reached a settlement with the U.S. Department of Treasury over sanctions violations. The Palo Alto, California-based firm allegedly offered its services to users in jurisdictions where the U.S. has imposed sanctions, including Cuba, Syria and Iran.
In its press release, the Treasury said that between March 2015 and December 2019, BitGo processed 183 digital currency transactions, totaling $9,127.79. These transactions were on behalf of individuals whose IP addresses indicated they were located in sanctioned jurisdictions, according to federal authorities.
Individuals located in Iran, Syria, Crimea, Cuba and Sudan were able to access BitGo’s hot wallet accounts and make transactions.
The Treasury said BitGo knew the individuals were located in sanctioned jurisdictions from the beginning. The firm reportedly tracks users’ IP addresses for security purposes related to logins. However, it failed to use this information to comply with U.S. government’s sanctions.
BitGo settled with the Treasury’s Office of Foreign Assets Control, agreeing to pay $93,830 in penalties. This sum is huge let-off for the company, the Treasury indicated. The statutory maximum civil monetary penalty applicable for such a violation is $53 million. The base monetary penalty is almost twice the amount BitGo will have to pay, standing at $183,000.
Treasury considered a number of mitigating factors which eventually led to the low penalty, including the fact the BitGo is a relatively small company and has been compliant in the five years preceding the violations. BitGo also cooperated with the Treasury’s investigations into the apparent violations.
In response to the Treasury’s inquest, BitGo has put in place a number of remedial measures to prevent a recurrence in the future. They include the hiring of a chief compliance officer and the implementation of a new OFAC policy. BitGo hired Shahla Ali, a former senior legal and compliance officer at top hedge funds, as the head of compliance in 2018
The Treasury cautioned digital currency companies against thinking they are exempt from adhering to financial regulations. It stated:
”This action highlights that companies involved in providing digital currency services—like all financial service providers—should understand the sanctions risks associated with providing digital currency services and should take steps necessary to mitigate those risks.”
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