Poloniex to pay $7.6 million in OFAC settlement

Poloniex, the cryptocurrency exchange acquired in 2019 by Tron founder Justin Sun, agreed with OFAC to pay $7.6 million for sanctions violations.

According to the regulator, between 2014 and 2019 the platform conducted more than 66,000 transactions totaling over $15.3 million in ‘restricted jurisdictions’ — Crimea, Cuba, Iran, Sudan and Syria.

The agency based the settlement on the finding that Poloniex’s violations were ‘not disclosed voluntarily’, but were not ‘egregious’.

According to OFAC’s investigation, the company possessed KYC data and clients’ IP addresses, but did not block sanctioned users.

Nevertheless, the Office acknowledged that by the end of 2017 Poloniex added restrictions that ‘began to substantially reduce’ the number of violations.

Circle, the co‑issuer of the USDC stablecoin, acquired Poloniex in February 2018 for reportedly $400 million, with plans to grow the business. However, the exchange’s market share had fallen from a peak of 60% in 2017 to 1%. Later, Justin Sun bought back part of the platform.

On June 9, 2021, the U.S. Securities and Exchange Commission said it had levied $10 million against Poloniex. According to the agency, from July 2017 to November 2019 the company offered unregistered securities in the form of digital tokens.

Platform representatives did not admit or deny the charges but agreed to pay the assessed penalty.

In November 2022, Huobi, also owned by Sun, established strategic partnerships with Poloniex.