U.S. levies criminal charges in first cryptocurrency economic sanctions evasion case

An American citizen has been accused of transmitting more than $10 million worth of Bitcoin to a virtual currency exchange in one of the countries sanctioned by the Treasury Department: Russia, Cuba, North Korea, Syria or Iran. The defendant is not named and the case remains sealed due to an ongoing investigation. The Department of Justice task force is targeting the use of cryptocurrency to evade U.S. sanctions. Earlier this month, the Treasury Department imposed its first sanction against a cryptocurrency mixer that is alleged to have helped hide the source of hacked funds including those by a North Korean government-linked network accused of stealing $1.75 billion in cryptocurrency to support the country’s illegal nuclear missile weapons development program. According to press reports, U.S> authorities allegedly discovered that a sanctioned company had set up a PayPal-type payment platform with the defendants’ assistance. Investigators were able to use blockchain analysis tools to trace that person’s actions as all transactions to individual accounts are recorded in public ledgers that can be amassed into large data sets. The $10 million in Bitcoin payments originated from the U.S. and were transmitted to customers of the payment platform, according to a US law enforcement affidavit cited in the court ruling. The platform advertised its services as designated to evade American sanctions and the defendant stated it could do so using Bitcoins while knowing the country was blacklisted. The Court’s opinion also said that there was probable cause to believe that the defendant’s transmission of virtual currency to the sanctioned country violated U.S. law.

JEFFREY NEWMAN, A FORMER PROSECUTOR IS A WHISTLEBLOWER LAWYER WITH THE FIRM NEWMAN & SHAPIRO. HE CAN BE REACHED AT JNEWMAN@NEWMANSHAPIRO.COM OR AT 617-823-3217