CoinList Settles with US on Sanction Breaches

Virtual Currency Exchange Pays Fine

CoinList, a virtual currency exchange based in California, has agreed to a settlement with the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC). The settlement addresses potential violations related to transactions processed for users in Crimea. The company will pay $1,207,830 to settle its potential civil liability.

Violation Details and Settlement

The violations reportedly occurred from April 2020 to May 2022. CoinList processed 989 transactions for users claiming residence in Crimea, contravening OFAC’s Russia/Ukraine sanctions. CoinList's compliance measures, which include customer screening and transaction monitoring, failed to detect users misrepresenting their residence. This oversight led to the opening of 89 accounts for users who listed “Russia” as their country of residence but provided addresses in Crimea.

Assessment of Penalties

The OFAC's initial statutory maximum penalty was a staggering $327,306,583. However, the final settlement considered both aggravating and mitigating factors. Aggravating factors included CoinList's lax approach to sanctions compliance and the potential undermining of the Ukraine and Russia-Related Sanctions Regulations' policy objectives. On the mitigating side, CoinList's cooperation with the investigation, lack of previous penalties, and the small percentage of total transactions represented by the violations played a role.

Remedial Measures and Compliance Investment

In response, CoinList has enhanced its screening protocols and compliance staff. Part of the settlement involves CoinList agreeing to suspend $300,000 of the payment, conditional on compliance improvements. Moreover, the company is investing an additional $300,000 in bolstering its sanctions compliance controls.

While CoinList’s willingness to cooperate and improve its compliance systems is commendable, the situation underscores the persistent challenges and risks in the virtual currency exchange industry.