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US files criminal case against US citizen for evading sanctions with cryptocurrency

The case represents the first time the Justice Department has filed criminal charges against an individual for violating US sanctions with virtual currency.
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Written by Stephanie Condon, Senior Staff Writer on

The US Justice Department has filed its first criminal complaint against a US citizen who tried to skirt US sanctions with cryptocurrency, according to a recently filed judicial opinion

Federal officials have in the past imposed fines against virtual currency platforms for violating sanctions laws, but the new complaint "demonstrates that the civil liability is not the ceiling," wrote US Magistrate Judge Zia M. Faruqui. "The Department of Justice can and will criminally prosecute individuals and entities for failure to comply with OFAC's regulations, including as to virtual currency."

In the Justice Department's complaint, government alleges that an unidentified US citizen conspired to operate an online payments platform based in a "comprehensively sanctioned country" -- which could be Cuba, Iran, North Korea, Syria, or Russia. 

The defendant allegedly created a front company in the US to purchase domains, used US financial accounts to conduct financial services on behalf of its platform and its customers, and transferred virtual currency to accounts associated with the platform. 

The defendant, the government says, used virtual currency exchanges to transmit over $10 million worth of bitcoin between the United States and the unnamed sanctioned country for the payments platform's customers.

The payments platform apparently advertised its services as designed to evade US sanctions, including through purportedly untraceable virtual currency transactions.

"Like Jason Voorhees the myth of virtual currency's anonymity refuses to die. See Friday the 13th (Paramount Pictures, 1980)," the judge wrote. "Appearing to rely on this perceived anonymity, Defendant did not hide the Payments Platform's illegal activity. Defendant proudly stated the Payments Platform could circumvent US sanctions by facilitating payments via bitcoin." 

The Court consequently concluded there was probable cause the defendant committed the alleged violations, Magistrate Judge Faruqui wrote.

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