US federal judge approves Justice Department criminal complaint over use of crypto to evade sanctions

The U.S. Department of Justice may pursue a criminal case against a U.S. citizen allegedly violating cryptocurrency sanctions.

According to a statement filed Friday in the U.S. District Court for the District of Columbia, the unnamed individual, who is the subject of a criminal investigation by the Department of Justice, allegedly received more than $10 million in Bitcoin (BTC) from a U.S. resident Crypto exchange sent to an exchange in a country the US is currently imposing sanctions on — suggesting Russia, Cuba, North Korea, Syria or Iran. The filing alleged that the person “conspired to violate the International Emergency Economic Powers Act” and conspired to defraud the United States.

The person reportedly “proudly stated that the payment platform can circumvent US sanctions” by using BTC and was aware of sanctions against the country. According to the filing, the US-based crypto exchange had the user’s information through Know Your Customer’s compliance policies.

“The Department of Justice can and will prosecute individuals and organizations for non-compliance [Office of Foreign Assets Control]’s regulations, including in relation to virtual currencies,” Magistrate Judge Zia Faruqui said in his opinion. “Prohibited financial services include any direct or indirect transfer of funds […] from the United States or by a US person/entity, wherever located, to the sanctioned entity/country. And for the avoidance of doubt, financial service providers include virtual currency exchanges.”

Faruqui added:

“The question is no longer whether virtual currency is here to stay (i.e. FUD) but whether fiat currency regulations will keep up with smooth and transparent payments on the blockchain.”

Related: US Treasury Sanctions 3 Ethereum Addresses Allegedly Linked to North Korea

The Treasury Department’s Office of Foreign Assets Control (OFAC) is responsible for administering sanctions for the United States. After the Russian military invaded Ukraine, the government office warned US citizens against using digital assets for the benefit of certain Russia-based companies and individuals, and added Russia-based dark web marketplace Hydra, crypto-mining service provider BitRiver and digital currency exchange Garantex added to its list of “Specially Designated Nationals,” a designation that generally prohibits Americans from doing business with them.