The United States Department of Justice has filed its first lawsuit regarding the use of bitcoin to circumvent sanctions.
In the first case of its sort, the US government plans to accuse an unidentified person of knowingly utilizing cryptocurrency to avoid sanctions. The government is pressing charges against an unidentified defendant for running an internet payment network in a sanctioned nation, according to an opinion made by the case’s judge.
Some of these transactions included digital currency. According to the court complaint, “The Payments Platform advertised its services as designed to evade U.S. sanctions, including through purportedly untraceable virtual currency transactions.”
The defendant also opened an account with a cryptocurrency exchange situated in the United States to purchase and sell Bitcoin. They then transferred thousands of dollars to two additional accounts at international exchanges. The defendant utilized those two accounts to send almost $10 million in Bitcoin between the United States and an undisclosed sanctioned nation.
The defendant did not try to disguise that his service escaped penalties because he thought cryptocurrency was undetectable. They thought the Payments Platform could avoid US sanctions. The defendant’s identity was linked to the payment site by investigators.
The defendant’s acts are illegal and fraudulent under the International Emergency Economic Powers Act (IEEPA). These acts also violate the Office of Foreign Assets Control’s penalties and regulations (OFAC).
It’s unknown which sanctioned countries is being investigated. North Korea, Cuba, Iran, Syria, Venezuela, and (arguably) Russia are the only countries targeted by US sanctions.
Prosecutors have previously investigated other cryptocurrency-related offences. Virgil Griffith, an Ethereum engineer, and two others were accused with breaking sanctions for assisting North Korea in developing blockchain technology in 2019.
Furthermore, the US Treasury has banned crypto addresses belonging to sanctioned organizations, such as North Korean hacking groups and Russian crypto miners.
The Department of Justice has also investigated some cryptocurrency instances unconnected to sanctions. For example, it has confiscated Bitcoin tied to the Silk Road darknet market and has accused a married pair of the Bitfinex hack this year.