The US Government fines BitPay for servicing sanctioned countries.
The penalty is proof that crypto companies must play by the rules set by the regulators.
Today, BitPay agreed to pay a $507,375 fine to the US Treasury’s Office of Foreign Assets Control (OFAC) for a total of 2,102 apparent violations of international sanctions.
According to OFAC’s notice, the agency found that BitPay facilitated payments in nation-states subject to US Sanctions, among them are Cuba, North Korea, Iran, and Syria, from 2013 to 2018.
The settlement is another reminder that even though Bitcoin’s decentralized network is above the law, centralized crypto companies are still subject to it.
BitPay handles payments for merchants that want to sell goods and services for crypto. When customers buy things in crypto, BitPay handles the paperwork and supervises the transaction, and then converts the money into fiat currencies and hands it over to the merchants.
The firm permitted people in sanctioned regions to place transactions with an amount of $129,000, and it was discovered by OFAC.
“We cooperated fully with the Office of Foreign Assets Control (OFAC) and are pleased to have resolved this matter,” Jan Jahosky, a spokesperson for BitPay, stated. He said that the case “involved a very small number of transactions.”
The treasury agency stated that BitPay already knew that it was processing payments in sanctioned countries because it recorded information about the location of customers buying things from BitPay merchants, for instance, their IP addresses.
The penalty could have been as high as $620 million, however, BitPay settled it by cooperating with regulations, had trained its employees to screen the customers, and had taken preventative steps.
Crypto companies are often in the firing line of the US regulators. In September 2020, Paxful dropped out of Venezuela, because of US Sanctions. And the US Securities and Exchange Commission has charged dozens of companies for running unregistered ICOs (token sales) before the launch to US investors.
A great concern to crypto companies is the Financial Crimes Enforcement Network’s Proposal to force the crypto companies to regulate transactions from the private crypto wallets.
Even though US President Joe Biden froze the federal rulemaking when he assumed office, it is clear that the US government is now closing the loopholes as quickly as possible.
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