Crypto Crackdown: OFAC Sanctions SUEX Cryptocurrency Exchange | Torres Law, PLLC

On September 21, 2021, in a first-of-it-kind motion, the U.S. Division of the Treasury Workplace of Overseas Property Management (“OFAC”) imposed financial sanctions on SUEX OTC, S.R.O. (“SUEX”), a digital forex alternate, for facilitating ransom funds pursuant to ransomware cyber-attacks.

In its press launch asserting the sanctions, OFAC indicated that greater than 40% of SUEX’s transactions concerned illicit actors. SUEX has been added to OFAC’s Record of Specifically Designated Nationals and Blocked Individuals (“SDN Record”), that means that each one of SUEX’s property and pursuits in property which might be topic to U.S. jurisdiction are blocked, and U.S. individuals are usually prohibited from participating in transactions with SUEX.

Together with designating SUEX as an SDN, OFAC additionally up to date its Advisory on Potential Sanctions Dangers for Facilitating Ransomware Funds (“Advisory”), which was initially printed on October 1, 2020. (For extra info on the unique Advisory, see our article Ransomware Attacks Are on the Rise; Are You Ready?)

The up to date Advisory’s contents are considerably just like the unique 2020 Advisory with the necessary addition of the SUEX designation info. OFAC additionally added a extra detailed dialogue of steps that victims of ransomware assaults can take to mitigate dangers, together with actions that OFAC would take into account mitigating components in any enforcement motion. Within the Advisory, OFAC makes clear that it’s going to proceed to sanction actors and others who materially help, sponsor, or present monetary, materials, or technological assist for ransomware cyberattacks.

SUEX is referred to by OFAC as a “digital forex alternate,” however the alternate offers in what is usually known as “cryptocurrency,” or in different phrases, a digital forex that’s encrypted and decentralized. It’s price noting that OFAC defines “digital forex” and “digital forex” individually, with digital forex being a subset of digital forex.

Beneath OFAC sanctions applications, “digital forex” is “a digital illustration of worth that capabilities as (i) a medium of alternate; (ii) a unit of account; and/or (iii) a retailer of worth; is neither issued nor assured by any jurisdiction; and doesn’t have authorized tender standing in any jurisdiction.” OFAC additional defines “digital forex” to incorporate “sovereign cryptocurrency, digital forex (non-fiat), and a digital illustration of fiat forex.”

As a result of cryptocurrency is a decentralized forex, authorities businesses, together with OFAC, have had a tough time regulating or imposing this current innovation within the monetary world. Apart from the ransomware fee context described within the Advisory (for which SUEX was particularly sanctioned), cryptocurrency can be – and has been – utilized in a wide range of different illicit contexts.

The SUEX designation is the primary occasion of OFAC sanctioning a cryptocurrency alternate, however OFAC has additionally focused actors concerned with digital forex, even sovereign governments. On March 19, 2018, President Trumpsigned Government Order 13827 (“EO 13827”), Taking Further Steps to Deal with the State of affairs in Venezuela, which prohibits U.S. individuals from participating in transactions related to “any digital forex, digital coin, or digital token, that was issued by, for, or on behalf of the Authorities of Venezuela on or after January 9, 2018.”

As the first enforcement company of the prohibition, OFAC printed Incessantly Requested Questions (“FAQs”) that interpret the prohibitions from EO 13827. Amongst different issues, the FAQs clarified that the Venezuelan “petro” and “petro-gold” cryptocurrencies are thought of “digital forex, digital coin, or digital token” for functions of EO 13827 enforcement. Nevertheless, Venezuela’s conventional fiat forex, the “bolivar fuerte,” just isn’t thought of a digital forex and is due to this fact not topic to the identical prohibitions.

Along with EO 13827’s particular prohibitions on Venezuelan digital forex, OFAC has additionally pursued enforcement actions towards firms within the cryptocurrency trade, with two such actions in simply the previous 12 months. On December 30, 2020, OFAC entered right into a $98,830 settlement settlement with BitGo, Inc. (“BitGo”) for alleged violations of a number of OFAC sanctions applications.

BitGo implements safety and scalability platforms for digital belongings and presents a non-custodial safe digital pockets administration service, that are providers associated to digital forex transactions. Individuals in Syria, Iran, Cuba, Sudan, and the Crimea area of Ukraine have been allegedly ready to make use of BitGo’s digital pockets providers as a result of Bitgo’s failure to limit sanctioned jurisdictions from entry to its providers.

Per the OFAC settlement settlement, BitGo processed 183 digital forex transactions for individuals in sanctioned jurisdictions. BitGo had purpose to know that individuals in sanctioned jurisdictions used its providers as a result of the corporate tracked Web Protocol (“IP”) addresses of its customers for safety functions. Nevertheless, BitGo failed to make use of this Iplocation info for sanctions compliance functions.

In the same case, on February 18, 2021, OFAC entered right into a $507,375 settlement settlement with BitPay, Inc. (“BitPay”) for obvious sanctions violations associated to digital forex transactions. BitPay presents a fee processing answer for retailers to just accept digital forex as fee for items and providers.

OFAC alleged that BitPay was doubtlessly liable for two,102 transactions utilizing digital forex between U.S. retailers and individuals within the Crimea area of Ukraine, Cuba, North Korea, Iran, Sudan, and Syria. Just like BitGo, BitPay collected location and Ipaddress info for its prospects however failed to make use of this info to forestall violations of sanctions applications. OFAC used the BitGo and BitPay enforcement actions to remind firms concerned in digital forex providers, like all monetary service suppliers, to take steps to grasp and mitigate sanctions compliance dangers.

Whereas BitGo and BitPay are U.S. firms that acquired penalties from OFAC, the SUEX matter is completely different as a result of SUEX is a international firm that has turn into topic to sanctions prohibitions. SUEX is a concierge cryptocurrency exchanger with areas in Russia and the Czech Republic. SUEX was a “nested” alternate, which implies it didn’t have direct custody of its shoppers’ cryptocurrency however as an alternative used the infrastructure of a bigger multinational alternate. Utilizing this mechanism, SUEX obscured its connection to the bigger cryptocurrency alternate and was in a position to very efficiently convert illicit funds of its prospects into bodily money. Though SUEX was particularly referenced within the Ransomware Advisory, OFAC’s concern with cryptocurrency exchanges additionally extends to facilitation of sanctions evasion, ransomware schemes, and different cybercrimes.

In asserting the SDN designation of SUEX, OFAC particularly said that SUEX facilitated illegal transactions for its personal illicit goals, in distinction with sure different digital forex exchanges which might be merely “exploited by malicious actors” together with, for instance, two Chinese language nationals that OFAC designated as SDNs on March 2, 2020 for laundering stolen cryptocurrency from a 2018 cyber intrusion towards a cryptocurrency alternate. This cyber intrusion is linked to Lazarus Group, a North Korean state-sponsored malicious cyber group, which is itself designated as an SDN.


The enforcement exercise directed towards the cryptocurrency market ought to serve to place U.S. individuals on discover as to the potential for sanctions legal responsibility with respect to 1) exercise associated to explicit cryptocurrencies, as is the case with the Venezuelan state cryptocurrency, or cryptocurrency exchanges, comparable to SUEX; and a pair of) the supply of cryptocurrency providers, which may result in violations of sanctions rules vis-à-vis SDN-listed individuals or individuals positioned in sanctioned jurisdictions.

As such, firms and people working on this ever-expanding sector ought to create a risk-based sanctions compliance program to mitigate and stop sanctions violations. Cryptocurrency providers firms also needs to practice staff on sanctions compliance, together with screening, identification of pink flags, and blocking and reporting prohibited transactions.

1 Discover of OFAC Sanctions Motion, 86 Fed. Reg. 53,147 (Sep. 24, 2021), accessible at

2 Treasury Takes Sturdy Actions to Counter Ransomware, U.S. Division of the Treasury Workplace of Overseas Property Management (Sep. 21, 2021), accessible at

3 Up to date Advisory on Potential Sanctions Dangers for Facilitating Ransomware Funds, U.S. Division of the Treasury Workplace of Overseas Property Management (Sep. 21, 2021), accessible at

4 Cryptocurrency Definition, Merriam-Webster, (final visited Sep. 29, 2021).

5 Incessantly Requested Questions: Questions on Digital Foreign money, U.S. Division of the Treasury Workplace of Overseas Property Management, (final visited Sep. 29, 2021).

6 Government Order 13827 of March 19, 2018, Taking Further Steps to Deal with the State of affairs in Venezuela (Mar. 19, 2018), accessible at

7 OFAC Enters $98,830 Settlement with BitGo, Inc. for Obvious Violations of A number of Sanctions Packages Associated to Digital Foreign money Transactions, U.S. Division of the Treasury Workplace of Overseas Property Management (Dec. 30, 2020), accessible at

8 OFAC Enters Into $507,375 Settlement with BitPay, Inc. for Obvious Violations of A number of Sanctions Packages Associated to Digital Foreign money Transactions, U.S. Division of the Treasury Workplace of Overseas Property Management (Feb. 18, 2021), accessible at

9 Treasury Sanctions People Laundering Cryptocurrency for Lazarus Group, U.S. Division of the Treasury Workplace of Overseas Property Management (Mar. 2, 2020), accessible at

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