Enforcement Actions Against Bittrex

The United States Department of the Treasury’s Office of Foreign Assets Control (OFAC) and the Financial Crimes Enforcement Network (FinCEN) have taken enforcement actions against Bittrex, a cryptocurrency exchange, for alleged violations of sanctions programs and reporting requirements under the Bank Secrecy Act (BSA). The announcement on October 11 revealed that Bittrex agreed to settle with OFAC for over $24 million due to shortcomings in its compliance mechanisms.

Sanctions Violations Summary

According to the Treasury, Bittrex failed to prevent users located in sanctioned regions—including Crimea, Cuba, Iran, Sudan, and Syria—from conducting approximately $263 million in cryptocurrency transactions between 2014 and 2017. The exchange did not effectively screen users based on location data derived from their internet protocol (IP) addresses.

Andrea Gacki, director of OFAC, stated, “When virtual currency firms fail to implement effective sanctions compliance controls… they can become a vehicle for illicit actors that threaten U.S. national security.” Gacki reiterated the importance of adherence to compliance protocols, emphasizing that crypto exchanges operating globally must understand their customers’ identities and locations.

FinCEN Parallel Enforcement Actions

Furthermore, FinCEN announced concurrent enforcement actions requiring Bittrex to pay over $29 million, with the $24 million payment to OFAC being credited towards these liabilities. FinCEN alleged that Bittrex did not maintain an effective Anti-Money Laundering (AML) program between 2014 and 2018, exposing the company to significant risks associated with illicit financial activities. Additionally, Bittrex reportedly failed to document numerous transactions originating from sanctioned jurisdictions through suspicious activity reports.

Bittrex’s Response

A spokesperson for Bittrex responded to the allegations, indicating that “none of the allegations” from FiCEN or OFAC pertained to the exchange’s current practices, which have improved since 2018. They expressed satisfaction at having resolved the matter, noting the employment of third-party experts to assess their compliance with sanctions and AML policies.

Broader Context of Crypto Regulation

This enforcement action reflects ongoing efforts by U.S. regulatory authorities to ensure that cryptocurrency exchanges operate within the legal frameworks intended to combat money laundering and protect national security. Previous cases include settlements involving other firms like BitGo and BitPay for similar sanctions violations.

Conclusion

The settlement represents a critical moment for Bittrex as it continues to navigate compliance issues while providing cryptocurrency trading services. As regulatory oversight intensifies, exchanges must prioritize adherence to established norms and take action to avoid severe penalties in the future.