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CURRENT-CY NEWS & LEGAL TOKENS

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On April 15, 2021, the United States announced numerous wide-ranging sanctions targeting Russia, including new prohibitions on dealings in Russian sovereign debt, sanctions in response to attempted election interference, and sanctions relating to the Crimea Region of Ukraine. Seward & Kissel’s full memorandum covering the new Russia sanctions is located here.

Notably, OFAC added 29 digital currency addresses to the Specially Designated Nationals and Blocked Persons List (SDN List) relating to the election interference sanctions. The digital currency addresses added to the SDN List include those for Litecoin (LTC), Bitcoin (XBT), Verge (XVG), Zcash (ZEC), DASH, Ether (ETH), and Bitcoin Cash (BCH).

The U.S. Department of Justice also charged two operators of an e-commerce business named SecondEye Solution (a/k/a Forwarderz) that allegedly had engaged in the sale of digital images of false identification documents. OFAC also designated SecondEye Solution for assisting Russia’s Internet Research Agency (IRA) in their attempts to influence the 2016 U.S. Presidential election. OFAC alleged that the IRA purchased 15 fraudulent U.S. driver licenses from SecondEye Solution, which were used as supporting documents for online social media accounts opened by the IRA.

LEGAL TOKENS

These new sanctions demonstrate OFAC’s continued commitment to targeting illicit activities involving digital currencies, including sanctions evasion. In the past, OFAC has added digital currency addresses to its SDN List, including privacy coins, and we expect that trend to continue.

The opinions expressed are those of the author(s) and do not necessarily reflect the views of the firm or its clients, or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.

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Andrew Jacobson | Associate

A former enforcement attorney at the New York State Department of Financial Services (DFS), Andrew Jacobson represents individual and institutional clients at Seward & Kissel in connection with complex governmental investigations, regulatory probes, and related civil matters. While at the DFS, Andrew was involved in early cryptocurrency issues and brought some of the most significant enforcement actions for violations of U.S. economic sanctions and anti-money laundering laws.

Andrew has extensive experience advising on matters relating to U.S. economic sanctions, including those administered by the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC), and anti-money laundering laws. Andrew serves as Chair of the Export Controls, Sanctions, and Anti-Corruption Subcommittee of the International Bar Association, co-chair of the Virtual Commodity Association’s BSA/AML Committee, and is a member of the Digital Chamber of Commerce’s AML Task Force.

As a member of Seward & Kissel’s Blockchain and Cryptocurrency Group, Andrew regularly advises clients on all aspects of financial crimes compliance and licensing in the virtual asset industry, including:

  • OFAC and FinCEN regulatory requirements, including asset blocking and reporting obligations;

  • Unhosted wallets and risks to software providers and VASPs;

  • Privacy coins, mixers, and other external privacy mechanisms;

  • Technology and open-source user platforms;

  • Ransomware and other cyberattack-related ransom payments;

  • BitLicense and state licensing requirements; and

  • Counterparty due diligence and screening.

 

“This is certainly a lesson to senior management to take compliance seriously and that there are consequences for individuals who don’t follow the regulatory regime.”

Andrew’s thoughts on BitMEX indictment, as published in Law360 article “BitMEX Case Seen as Blessing in Disguise for Crypto Sector”

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