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A Washington court has approved a ruling on a U.S. Department of Justice indictment of a payment company founder for transferring digital assets to individuals from sanctioned countries.
Law enforcement officials suspected an American man, whose name was not disclosed, of transferring more than $10 million in bitcoins to circumvent economic sanctions. This is the first time U.S. authorities have made such a charge in connection with cryptocurrencies.
U.S. Magistrate Judge Zia M. Faruqui of Washington, D.C. issued a statement explaining the decision. The statement of claim stated that the defendant had registered the payment company as a front to transfer funds to the sanctioned country.
Judge Farooki alleged that the defendant bought and sold bitcoins using a U.S. cryptocurrency exchange that was funded with fiat currency from a U.S. bank account. The defendant then sent digital currency to foreign cryptocurrency exchanges from his office on the trading platform. After that, he transferred the cryptocurrency wallet’s private key to the user of the sanctioned country.
Farooqi raises concerns in his statement: whether authorities will be able to monitor illegal cryptocurrency transactions:
“Virtual currency is traceable. However, like Jason Voorhees (Jason Voorhees, the hero of “Friday the 13th”), the myth of virtual currency anonymity is not dying.”
The judge referred in his ruling to recent recommendations from the Treasury Department’s Office of Foreign Assets Control (OFAC), which in May imposed its first sanctions against cryptocurrency mixer Blender.io for its ties to North Korean hackers.
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