US Federal Judge Approves Department of Justice Criminal Complaint for Use of Cryptocurrencies to Evade Sanctions

US Federal Judge Approves Department of Justice Criminal Complaint for Use of Cryptocurrencies to Evade Sanctions

The United States Department of Justice could move forward with a criminal prosecution case against a US citizen who allegedly violated sanctions through the use of cryptocurrencies.

According to an opinion filed Friday in the United States District Court for the District of Columbia, The anonymous individual who is the subject of a criminal investigation by the Department of Justice allegedly sent more than $10 million worth of Bitcoin (BTC) from a United States-based cryptocurrency exchange to an exchange in a country to which the United States The United States currently has on its sanctions list – 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 was able to bypass US sanctions” using BTC and that it was aware of the sanctions placed on the country. According to the filing, United States-based cryptocurrency exchanges had user information through “Know Your Customer” compliance policies.

“The Department of Justice can and will criminally prosecute individuals and entities for failure to comply with the regulations of the [Oficina de Control de Bienes Extranjeros]even when it comes to virtual currency,” Magistrate Judge Zia Faruqui said in his 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 for the avoidance of doubt, financial service providers include virtual currency exchanges.”

Faruqui added:

“The question is no longer whether virtual currency is here to stay (ie FUD), but whether fiat currency regulations will keep pace with frictionless and transparent payments in the blockchain sector.”

The Treasury Department’s Office of Foreign Assets Control, OFAC, is responsible for administering sanctions imposed by the United States. Following Russia’s military invasion of Ukraine, the government office warned US residents not to use digital assets to benefit certain entities and individuals based in Russia, Y added to the Russian darknet market, Hydra, to cryptocurrency mining service provider BitRiver and to digital currency exchanges Garantex to its list of “Specially Designated Nationals,” a designation that generally bars Americans from doing business with them.

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