The United States Department of Justice could bring criminal charges against a US citizen who allegedly violated the sanctions using cryptocurrency.
According to a notice filed Friday in the U.S. District Court for the District of Columbia, the unnamed individual who is under criminal investigation by the Justice Department allegedly sent more than $10 million in Bitcoin (BTC) from a US-based crypto exchange to an exchange in a country that the US is currently imposing sanctions on – suggesting Russia, Cuba, North Korea, Syria or Iran. The filing alleged that the individual “conspired to violate the International Emergency Economic Powers Act” and conspired to defraud the United States.
The individual allegedly “proudly stated that the payment platform can circumvent US sanctions” using BTC and was aware of the sanctions imposed on the country. According to the filing, the US-based crypto exchange had the user’s information through Know Your Customer compliance policies.
“The Department of Justice can and will criminally prosecute individuals and entities for failure to comply with [Office of Foreign Assets Control]’s, including in relation to virtual currency,” Magistrate Judge Zia Faruqui said in her opinion. “Prohibited financial services include any transfer of funds, directly or indirectly […] from the United States or by a US person/entity, wherever located, to the sanctioned country/entity. And just so there is no doubt, financial service providers include virtual currency exchanges.
“The question is no longer whether virtual currency is here to stay (i.e. FUD), but rather whether regulation of fiat currencies will keep pace with frictionless and transparent payments on the blockchain. “
Related: US Treasury Department Sanctions 3 Ethereum Addresses Allegedly Linked to North Korea
The Treasury Department’s Office of Foreign Assets Control, or OFAC, is responsible for administering sanctions for the United States. Following the invasion of Ukraine by the Russian military, the government office warned US residents not to use digital assets for the benefit of certain entities and individuals based in Russia, and added the market Russian darknet Hydra, crypto-mining service provider BitRiver and digital currency exchange Garantex on its list. “Specially Designated Nationals,” a designation that generally prohibits Americans from doing business with them.