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US government files the first case of evading crypto sanctions

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Pavan A Follow


May, 20 2022

May, 20 2022

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The US Justice Department is prosecuting the operator of a payment platform used to evade sanctions using cryptocurrency.

The prosecution could mark the first legal action taken against crypto-related sanctions evasion, demonstrating two things: how effectively crypto can circumvent financial blocks and how credible it is with law enforcement.

In a historic move, the U.S. government is set to file charges against an unnamed defendant who used cryptocurrencies to evade sanctions in a shady scheme. The government claims, based on the judgment, that the defendant operated an online payment platform in a sanctioned country. The defendant, whose identity stays hidden, allegedly transferred $10 million in bitcoins to Cuba, Iran, Syria, North Korea, or Russia.

As noted in the court document, “The Payments Platform advertised its services as designed to evade U.S. sanctions, including through purportedly untraceable virtual currency transactions.”

Moreover, the defendant opened an account with a U.S.-based cryptocurrency exchange to purchase and sell Bitcoin. Thousands of dollars were then sent to two other accounts at foreign exchanges. Furthermore, the defendant used multiple accounts to transmit more than $10 million of Bitcoin between the U.S. and the unnamed sanctioned country.

In June, the FBI recovered bitcoin collected from the Colonial Pipeline ransomware attack, demonstrating the traceability of crypto.

Legislators have been vocal since Russia invaded Ukraine regarding the potential for cryptocurrency to help people evade sanctions. Ukraine's government received millions of dollars via cryptocurrency donations, but many Russian individuals also turned to crypto after they were cut off from outside financial support.

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Pavan A

CBW - External Analyst


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