- BitPay must pay a fine to the US Treasury.
- The Office of Foreign Assets Control found apparent international sanctions violations.
- BitPay facilitated 2,101 transactions from people in sanctioned countries.
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payments processor BitPay today agreed to pay a $507,375 fine to the US Treasury’s Office of Foreign Assets Control (“OFAC”) for 2,102 apparent violations of international sanctions.
According to OFAC’s notice, the agency found that BitPay, an Atlanta, Georgia-based crypto payments portal for online merchants founded in 2011, facilitated payments in nation-states subject to US sanctions, among them Cuba, North Korea, Iran and Syria, between 2013 and 2018.
The settlement is yet another reminder that although Bitcoin’s decentralized network is above the law, centralized crypto companies are still very much 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 facilitates the transaction, then converts that money into fiat currencies and hands it over to the merchants.
The firm allowed people in sanctioned regions to place transactions worth, cumulatively, $129,000, found 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, told Decrypt. He said that the case “involved a very small number of transactions.”
The treasury agency said that BitPay knew it was processing payments in sanctioned countries because it recorded information about the location of customers buying things from BitPay merchants, such as their IP addresses.
“BitPay failed to exercise due caution or care for its sanctions compliance obligations when it allowed persons in sanctioned jurisdictions to transact with BitPay’s merchants using digital currency for approximately five years, even though BitPay had sufficient information to screen those customers,” said OFAC in its statement.
The penalty could have been as high as $620 million, but BitPay settled by cooperating with regulations, had trained its employees to screen customers and had taken preventative steps.
Crypto companies are frequently in the firing line of US regulators. Paxful in September 2020 dropped out of Venezuela, citing US sanctions. And the US Securities and Exchange Commission has slammed dozens of companies for running unregistered (token sales) ahead of their launch to US investors.
Of great concern to crypto companies is the Financial Crimes Enforcement Network’s proposal to force crypto companies to regulate transactions from private .
Although US President Joe Biden froze federal rulemaking upon assuming office, it’s clear that the US government is closing the loopholes as quickly as possible.