Crypto wallet and custodian BitGo has agreed to pay just short of $100,000 to settle violations of sanctions rules administered by the US Treasury’s Office of Foreign Assets Control.
The OFAC said the violations occurred because BitGo, in 183 instances, allowed to people located in sanctioned regions to use its non-custodial digital wallet management service. The crypto startup was aware that based on IP address data it collects, users from Ukraine, Cuba, Iran, Sudan, and Syria logged into BitGo platform.
Between March 2015 and December 2019, BitGo had deficiencies in the sanctions screening process which led to transactions worth $9,127 with persons in sanctioned territories. The firm’s systems failed to analyze all data required for compliance with OFAC sanctions and therefore didn’t implement controls to prevent such users from accessing its hot wallet service.
In addition, the company failed to inform OFAC about these transactions and also did not voluntarily self-disclose violations of US sanctions.
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“Prior to April 2018, BitGo allowed individual users of its secure wallet management services to open an account by providing only a name and email address. In April 2018, BitGo amended its practices to require all new accountholders to also verify the country in which they are located, but BitGo generally relied on each user’s attestation regarding their location and did not perform additional verification or diligence on the location of its users,” the OFAC said.
The $98,830 fine is quite mild by OFAC standards, which said it could have fined BitGo more than $50 million for the improper transactions. The mitigated penalty reflects the agency’s determination that BitGo is a “relatively small company”, and also the remedial measures the company implemented when it discovered the apparent violations.
Nevertheless, the settlement sends an important message to crypto businesses. The OFAC itself reiterated that digital asset institutions should take a risk-based approach to sanctions compliance to detect flaws in internal controls.
Founded in 2013, BitGo provides multi-signature wallets alongside qualified custodial services and access to liquidity through its institutional-focused trading service, BitGo Prime. Earlier this month, BitGo said it has reached $16 billion in digital assets under custody (AUC), citing institutional interest in cryptocurrencies.