US Prosecutors Are Going After Theft Of Crypto Sanctions

The US Department of Justice is suing the operator of a payments platform that violated economic sanctions by using cryptocurrencies. As reported by The Washington Post, this is possibly the first criminal prosecution of crypto-related sanctions evasion — underscoring both the technology's ability to obtain financial blocks and its traceability by law enforcement.

District of Columbia Magistrate Judge Zia Farooqui revealed the existence of a payment platform's name as well as the existence of prosecutors in an opinion on a still-sealed case dealing with a "widely accepted country." (There are five such countries: Iran, North Korea, Syria, Cuba, and the Crimea region of Ukraine.) The operator apparently used the exchange to buy $10 million in bitcoin and remit it to the country on behalf of platform customers.

Farooqui backed the guidance of the Office of Foreign Asset Control (OFAC), saying virtual currency comes under economic sanctions. “The question is no longer whether virtual currency is here to stay,” he writes, “but whether fiat currency regulations will keep pace with frictionless and transparent payments on the blockchain.” It is especially important to prosecute criminal cases of intentional infringement because OFAC could, in theory, go after parties who were unintentionally motivated to participate – such as the crypto exchanges used to buy bitcoin. Gaya - to civil violations.

Rai also stresses that crypto is not as anonymous as some users believe. The Platform Operator “does not hide the illegal activity of the Payment Platform. The defendants proudly state that the payments platform can circumvent US sanctions by facilitating payments via bitcoin," writes Farooqui. They suggest they were implicated in a false sense of security. "Virtual currency traced Yet like Jason Voorhees, the myth of virtual currency's anonymity refuses to die."

Crypto has emerged as a way to remove barriers to international commerce, especially after Russia's invasion of Ukraine earlier this year. (This practice may have been complicated by the extreme volatility of the virtual currency.) While the government of Ukraine took in millions of dollars through cryptocurrency donations, some individual Russians turned to crypto when their financial ties to the outside world were cut off.

But Farooqui's opinion seeks to throw cold water on its criminal use. “Point one: virtual currency is untraceable? Wrong,” he writes in a conclusion. “Point two: restrictions on virtual currency don’t apply? wrong."