CoinList pays $1.2M to OFAC for Ukraine sanction breaches

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Crypto exchange CoinList has agreed to pay over $1.2 million to resolve claims by the US Office of Foreign Assets Control (OFAC) regarding violations of Russian sanctions. The sanctions prohibit business dealings with the Crimea region of Ukraine after Russia annexed it in 2014.

Despite several sanctions compliance measures, including customer screening against OFAC and other sanctions lists, CoinList’s procedures failed to identify users claiming residence in non-embargoed countries while providing addresses in Crimea. This oversight led to the opening of 89 accounts for customers who, although they listed “Russia” as their country of residence, provided Crimean addresses.

CoinList’s transactions during this period totaled $1,252,280, which OFAC considers a violation of the Ukraine-/Russia-Related Sanctions Regulations. The statutory maximum civil monetary penalty for this case was $327,306,583. However, the base penalty was $3,097,000, considering various aggravating and mitigating factors.

The settlement reached by CoinList reflects that the violations committed were not egregious or voluntarily self-disclosed by the company. The settlement amount is a much smaller fraction of the potential maximum civil penalty of $327 million. 

CoinList, a relatively small exchange with a 24-hour volume of just $350,000, expressed their satisfaction with OFAC’s decision. The company has committed to significantly improving its compliance processes, control systems, and training to demonstrate its commitment to compliance further.

The Office of Foreign Assets Control (OFAC) actively ensures that crypto exchanges operating in the US or dealing with US individuals adhere to relevant regulations, including international sanctions. The heightened oversight of the crypto industy stems from worries about the potential use of cryptocurrencies to evade sanctions, launder money, or engage in other unlawful activities.

In November 2023, Binance Holdings Ltd., the world’s largest cryptocurrency exchange, settled with the Office of Foreign Assets Control (OFAC) for nearly $969 million due to potential civil liability for over 1.6 million apparent sanctions violations. This settlement, part of a broader regulatory crackdown, underscores OFAC’s active role in ensuring that crypto exchanges operating in the U.S. or dealing with U.S. individuals adhere to relevant regulations. 

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