Get Ready for Crypto Sanctions Enforcement

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Get Ready for Crypto Sanctions Enforcement

Post by howlermunkey » Sun Dec 02, 2018 7:47 am

Beau Barnes and Jake Chervinsky of Kobre & Kim LLP are litigators and government enforcement defense attorneys who specialize in disputes and investigations related to digital assets. This article is not intended to provide legal advice.

For the past year, the cryptocurrency industry’s attention has focused on the Securities and Exchange Commission’s deliberations over how to enforce U.S. securities laws. But the past two months have seen important developments on a new regulatory front: the application of U.S. sanctions laws by the Treasury Department’s Office of Foreign Assets Control (OFAC).

Last week, OFAC sanctioned two Iranian individuals for cyberattacks against U.S. networks. For the first time ever, OFAC targeted both the individuals who committed the offense and their associated bitcoin addresses.

OFAC is announcing a clear message to the industry: comply with sanctions laws or pay the price.

Crypto industry, meet OFAC
Economic sanctions result from U.S. government policy decisions that certain countries, governments, individuals, or companies shouldn’t be allowed to transact with “U.S. persons.” The category of “U.S. persons” is expansive: it includes U.S. citizens and permanent residents anywhere in the world, non-U.S. nationals within the United States, and entities incorporated under U.S. law (as well as their foreign branches).

OFAC has broad authority to impose sanctions based on perceived threats to U.S. national security. OFAC typically imposes “primary sanctions” by prohibiting U.S. persons from directly or indirectly transacting with a sanctioned party, in addition to “secondary sanctions” based on a non-U.S. person’s transactions with other sanctioned parties.

Some sanctions are nearly absolute, such as those prohibiting almost all transactions with countries like Iran, while other sanctions are nuanced, like those prohibiting certain transactions with Venezuela related to certain debt transactions. Sanctions violations are punishable as civil or criminal offenses and can result in steep fines. ... nforcement

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