A prominent cryptocurrency exchange has recently reached a settlement with the U.S. Justice Department, agreeing to a payment exceeding $504 million. This action followed accusations of operating without the necessary money transmitter license while catering to clients based in the United States.
In the settlement, the exchange has agreed to pay an immediate penalty of $84 million. The remaining amount of $421 million pertains to the profits accrued from its services to U.S. customers during the time it operated outside regulatory guidelines. The company stated that a significant portion of these fees originated from a handful of institutional clients.
The Justice Department revealed that the exchange had actively sought out U.S. customers since at least 2017, violating its own policy that sought to prevent American individuals from using its services. This violation lasted until early 2024 and reportedly involved over a trillion dollars in cryptocurrency transactions, including around $5 billion linked to suspicious activities.
According to the Acting U.S. Attorney, the exchange had knowingly neglected anti-money laundering laws for several years, allowing illegal transactions and criminal proceeds to flow through its platform. Federal authorities indicated that the exchange had a history of ignoring required compliance measures, including the registration as a money service business with the Financial Crimes Enforcement Network (FinCEN).
In a troubling revelation, it came to light that some employees were allegedly advising U.S. customers on how to bypass restrictions by misrepresenting their country of residence. The exchange also engaged in marketing efforts specifically targeting the U.S. market, hosted local events, and utilized affiliate marketers based in the country to increase its customer base.
Moreover, it was highlighted that the exchange did not implement commercially available software to monitor suspicious activities, including potential money laundering, until around May 2023. This lack of oversight extended to transaction activities with countries and regions under sanctions.
Following the settlement, the exchange has shifted its focus toward expanding its operations in Europe, particularly after the recent introduction of the MiCA (Markets in Crypto-Assets) regulatory framework in that region.
This development serves as a stark reminder of the ongoing scrutiny facing cryptocurrency platforms operating across borders, emphasizing the importance of compliance with local financial regulations to avoid severe penalties.