Cryptocurrencies have long was regarded as a Wild West remittance, but few online payment and remittance platforms have been as outrageous in appealing to illicit money as one that is highlighted but not mentioned in a memorandum unveiled on May 13 at the U.S. District Court in Washington. Colombia. . The platform appears to be based in a “country with comprehensive sanctions” – probably in North Korea, according to those in the crypto-law space – and has touted its services as evading US financial sanctions. It was built using a sham company from the US that facilitated the purchase of domain names, according to court documents.

The platform, which was designed to circumvent financial bans aimed at defeating homelands, handled more than $ 10 million in bitcoins that were transferred between the U.S. and the sanctioned country through a U.S. cryptocurrency exchange. opinion, there was no knowing that it helps users avoid sanctions.

The opinion, written by Magistrate Zia Farooki, was probably revealed because someone was arrested for running the crypto platform. All of this means a shift in the way U.S. law enforcement – and the law – handle cryptocurrencies.

“Question one: is virtual currency not tracked? WRONG. … Question two: sanctions do not apply to virtual currency? WRONG, ”Farouka concludes in his opinion, referring directly to two Saturday night live scenes that parody TV presenter and political commentator John McLaughlin, who was known for his direct style.

“We’ve heard for some time that cryptocurrency can potentially be used to evade sanctions,” said Ari Redboard, head of legal and government affairs at TRM Labs, which monitors cryptocurrency fraud and financial crime. “What we see here is the first time the Ministry of Justice has opened a criminal case on the use of cryptocurrency to evade sanctions.”

This decision notifies cryptocurrencies that they may be responsible for allowing users to circumvent sanctions – intentionally or not – and is a warning to those trying to evade such sanctions that law enforcement is appealing to them.

For years, cryptocurrency has been seen as a safe haven for criminal gangs and businesses seeking to launder illicit proceeds. Unlike a bank account, a cryptocurrency does not require a name attached to transactions that are recorded in the blockchain’s public ledger. This apparent anonymity attracted criminal enterprises in the early days of cryptocurrencies such as bitcoin. “You’ve had the Silk Roads of the World and AlphaBays,” says Jesse K. Liu, a partner at Skadden, Arps, Slate, Meagher & Flom. A former deputy chief legal counsel at the U.S. Treasury Department, who also worked at the Department of Justice, Liu has opened several criminal cases. “Early reports of bitcoins have shown that it’s some kind of secret anonymous currency that the bad guys did bad things.” The founding principles of the platform – and the libertarian, caring, decentralized attitude that spawned it – have contributed to the notion that virtual currencies cannot be traced.

All of these groups and individuals ignored the fact that the basis of the cryptocurrency – a fixed blockchain that keeps track of every transaction – created a supply of evidence for prosecutors. “The thing that’s so unique about crypto is that you can really track and track the flow of those funds in a fully open book,” Redboard says. “It’s just because the crypt is moving and living in an open book on the blockchain, which has allowed this type of investigation to take place.”

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