BitGo Fined For Allowing Sanctioned Countries Access to its Crypto Wallet
- Based on IP address data, BitGo was aware that users from Ukraine, Cuba, Iran, Sudan and Syria used its hot wallets.
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 people located in sanctioned regions to use its non-custodial digital wallet management service. The crypto startup was aware that based on the 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 did not implement controls to prevent such users from accessing its hot wallet service.
In addition, the company failed to inform OFAC about these transactions and did not voluntarily self-disclose violations of US sanctions.
“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 account holders 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.
A Message to All Crypto Firms
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 Liquidity The term liquidity refers to the process, speed, and ease of which a given asset or security can be converted into cash. Notably, liquidity surmises a retention in market price, with the most liquid assets representing cash.The most liquid asset of all is cash itself.· In economics, liquidity is defined by how efficiently and quickly an asset can be converted into usable cash without materially affecting its market price. · Nothing is more liquid than cash, while other assets represent The term liquidity refers to the process, speed, and ease of which a given asset or security can be converted into cash. Notably, liquidity surmises a retention in market price, with the most liquid assets representing cash.The most liquid asset of all is cash itself.· In economics, liquidity is defined by how efficiently and quickly an asset can be converted into usable cash without materially affecting its market price. · Nothing is more liquid than cash, while other assets represent Read this Term 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 Cryptocurrencies By using cryptography, virtual currencies, known as cryptocurrencies, are nearly counterfeit-proof digital currencies that are built on blockchain technology. Comprised of decentralized networks, blockchain technology is not overseen by a central authority.Therefore, cryptocurrencies function in a decentralized nature which theoretically makes them immune to government interference. The term, cryptocurrency derives from the origin of the encryption techniques that are employed to secure the netw By using cryptography, virtual currencies, known as cryptocurrencies, are nearly counterfeit-proof digital currencies that are built on blockchain technology. Comprised of decentralized networks, blockchain technology is not overseen by a central authority.Therefore, cryptocurrencies function in a decentralized nature which theoretically makes them immune to government interference. The term, cryptocurrency derives from the origin of the encryption techniques that are employed to secure the netw Read this Term.
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 people located in sanctioned regions to use its non-custodial digital wallet management service. The crypto startup was aware that based on the 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 did not implement controls to prevent such users from accessing its hot wallet service.
In addition, the company failed to inform OFAC about these transactions and did not voluntarily self-disclose violations of US sanctions.
“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 account holders 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.
A Message to All Crypto Firms
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 Liquidity The term liquidity refers to the process, speed, and ease of which a given asset or security can be converted into cash. Notably, liquidity surmises a retention in market price, with the most liquid assets representing cash.The most liquid asset of all is cash itself.· In economics, liquidity is defined by how efficiently and quickly an asset can be converted into usable cash without materially affecting its market price. · Nothing is more liquid than cash, while other assets represent The term liquidity refers to the process, speed, and ease of which a given asset or security can be converted into cash. Notably, liquidity surmises a retention in market price, with the most liquid assets representing cash.The most liquid asset of all is cash itself.· In economics, liquidity is defined by how efficiently and quickly an asset can be converted into usable cash without materially affecting its market price. · Nothing is more liquid than cash, while other assets represent Read this Term 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 Cryptocurrencies By using cryptography, virtual currencies, known as cryptocurrencies, are nearly counterfeit-proof digital currencies that are built on blockchain technology. Comprised of decentralized networks, blockchain technology is not overseen by a central authority.Therefore, cryptocurrencies function in a decentralized nature which theoretically makes them immune to government interference. The term, cryptocurrency derives from the origin of the encryption techniques that are employed to secure the netw By using cryptography, virtual currencies, known as cryptocurrencies, are nearly counterfeit-proof digital currencies that are built on blockchain technology. Comprised of decentralized networks, blockchain technology is not overseen by a central authority.Therefore, cryptocurrencies function in a decentralized nature which theoretically makes them immune to government interference. The term, cryptocurrency derives from the origin of the encryption techniques that are employed to secure the netw Read this Term.