OFAC Cryptocurrency Seizures and Forfeitures

OFAC Cryptocurrency Seizures and Forfeitures

The Office of Foreign Assets Control, or OFAC, is an agency that’s part of the U.S. Department of the Treasury. Their main job is to enforce economic and trade sanctions against certain foreign countries, groups, and people. In recent years, OFAC has started paying a lot more attention to cryptocurrencies and digital assets. They see it as a new way to enforce sanctions and seize assets. This article will give an overview of what OFAC does, important laws and policies about cryptocurrency forfeiture, major seizure cases, and what it means for the crypto industry.

What is OFAC and What Do They Do?

OFAC runs and enforces economic sanctions programs targeting specific foreign countries, organizations, and individuals. These sanctions restrict trade, financial transactions, and other dealings with the sanctioned parties. OFAC also keeps a list of Specially Designated Nationals who aren’t allowed to access the U.S. financial system.

To enforce the sanctions, OFAC has the authority to identify, freeze, and seize assets connected to sanctioned groups and people. This includes assets held by U.S. citizens and companies. In recent years, OFAC has claimed more and more power over cryptocurrencies and digital assets.

Key OFAC Policies on Cryptocurrency

Here are some of the main OFAC policies and guidance about cryptocurrency forfeiture and sanctions enforcement:

• In 2018, OFAC updated its Framework for OFAC Compliance Commitments to say that sanctions apply to digital currencies and assets.
• In 2019, OFAC published guidance clarifying that cryptocurrency addresses tied to blocked individuals are also considered blocked property subject to sanctions.
• OFAC has said that exchanges, wallet providers, and other crypto companies must block access to and freeze assets linked to OFAC-sanctioned addresses and people.

These policies opened the door for OFAC to aggressively go after cryptocurrencies related to sanctions violations.

Major OFAC Cryptocurrency Seizures

Here are some of the biggest cryptocurrency seizures by OFAC:

• In 2020, OFAC seized 113 virtual currency accounts worth over $1 billion connected to cybercriminals.
• In August 2022, OFAC sanctioned the virtual currency mixer Tornado Cash and seized over $7 billion in cryptocurrency.
• In November 2022, the DOJ announced the seizure of over 50,000 bitcoins worth $3.36 billion from the Silk Road dark web marketplace.

These seizures show OFAC is getting better at going after cryptocurrencies linked to sanctioned groups or illegal activity.

Christine Twomey

2024-03-21

Just had my Divorce case settled 2 months ago after having a horrible experience with another firm. I couldn’t be happier with Claire Banks and Elizabeth Garvey with their outstanding professionalism in doing so with Spodek Law Group. Any time I needed questions answered they were always prompt in doing so with all my uncertainties after 30 yrs of marriage.I feel from the bottom of my heart you will NOT be disappointed with either one. Thanks a million.

Brendan huisman

2024-03-18

Alex Zhik contacted me almost immediately when I reached out to Spodek for a consultation and was able to effectively communicate the path forward/consequences of my legal issue. I immediately agreed to hire Alex for his services and did not regret my choice. He was able to cover my case in court (with 1 day notice) and not only was he able to push my case down, he carefully negotiated a dismissal of the charge altogether. I highly recommend Spodek, and more specifically, Alex Zhik for all of your legal issues. Thanks guys!

Guerline Menard

2024-03-18

Thanks again Spodek law firm, particularly Esq Claire Banks who stood right there with us up to the finish line. Attached photos taken right outside of the court building and the smile on our faces represented victory, a breath of fresh air and satisfaction. We are very happy that this is over and we can move on with our lives. Thanks Spodek law 🙏🏼🙏🏼🙏🏼🙏🏼🙌🏼❤️

Keisha Parris

2024-03-15

Believe every single review here about Alex Z!! From our initial consultation, it was evident that Alex possessed a profound understanding of criminal law and a fierce dedication to his clients rights. Throughout the entirety of my case, Alex exhibited unparalleled professionalism and unwavering commitment. What sets Alex apart is not only his legal expertise but also his genuine compassion for his clients. He took the time to thoroughly explain my case, alleviating any concerns I had along the way. His exact words were “I’m not worried about it”. His unwavering support and guidance were invaluable throughout the entire process. I am immensely grateful for Alex's exceptional legal representation and wholeheartedly recommend his services to anyone in need of a skilled criminal defense attorney. Alex Z is not just a lawyer; he is a beacon of hope for those navigating the complexities of the legal system. If you find yourself in need of a dedicated and competent legal advocate, look no further than Alex Z.

Taïko Beauty

2024-03-15

I don’t know where to start, I can write a novel about this firm, but one thing I will say is that having my best interest was their main priority since the beginning of my case which was back in Winter 2019. Miss Claire Banks, one of the best Attorneys in the firm represented me very well and was very professional, respectful, and truthful. Not once did she leave me in the dark, in fact she presented all options and routes that could possibly be considered for my case and she reinsured me that no matter what I decided to do, her and the team will have my back and that’s exactly what happened. Not only will I be liberated from this case, also, I will enjoy my freedom and continue to be a mother to my first born son and will have no restrictions with accomplishing my goals in life. Now that’s what I call victory!! I thank the Lord, My mother, Claire, and the Spodek team for standing by me and fighting with me. Words can’t describe how grateful I am to have the opportunity to work with this team. I’m very satisfied, very pleased with their performance, their hard work, and their diligence. Thank you team!

Anthony Williams

2024-03-12

Hey, how you guys doing? Good afternoon my name is Anthony Williams I just want to give a great shout out to the team of. Spodek law group. It is such a honor to use them and to use their assistance through this whole case from start to finish. They did everything that they said they was gonna do and if it ever comes down to it, if I ever have to use them again, hands-down they will be the first law office at the top of my list, thank you guys so much. It was a pleasure having you guys by my side so if you guys ever need them, do not hesitate to pick up the phone and give them a call.

Loveth Okpedo

2024-03-12

Very professional, very transparent, over all a great experience

Bee L

2024-02-28

Amazing experience with Spodek! Very professional lawyers who take your case seriously. They treated me with respect, were always available, and answered any and all questions. They were able to help me very successfully and removed a huge stress. Highly recommend.

divesh patel

2024-02-24

I can't recommend Alex Zhik and Spodek Law Firm highly enough for their exceptional legal representation and personal mentorship. From the moment I engaged their services in October 2022, Alex took the time to understand my case thoroughly and provided guidance every step of the way. Alex's dedication to my case went above and beyond my expectations. His expertise, attention to detail, and commitment to achieving the best possible outcome were evident throughout the entire process. He took the time to mentor me, ensuring I understood the legal complexities involved to make informed decisions. Alex is the kind of guy you would want to have a beer with and has made a meaningful impact on me. I also want to acknowledge Todd Spodek, the leader of the firm, who played a crucial role in my case. His leadership and support bolstered the efforts of Alex, and his involvement highlighted the firm's commitment to excellence. Thanks to Alex Zhik and Todd Spodek, I achieved the outcome I desired, and I am incredibly grateful for their professionalism, expertise, and genuine care. If you're in need of legal representation, look no further than this outstanding team.

Load more

Google rating score: 4.9 of 5, based on 736 reviews

OFAC’s Authority to Seize Cryptocurrency

OFAC mainly uses its administrative forfeiture authority to seize cryptocurrency assets. This lets OFAC take assets worth less than $500,000 without court approval. Here’s how it works:

1. OFAC identifies cryptocurrency connected to sanctions violations, like deals with prohibited parties or countries.
2. OFAC issues a seizure warrant and notifies the asset owner.
3. If no claim is filed in 30 days, OFAC can finalize the forfeiture.

For seizures over $500,000, OFAC has to get federal court approval. OFAC also partners with agencies like the DOJ and IRS to jointly seize cryptocurrency.

Criticisms of OFAC’s Cryptocurrency Seizures

OFAC’s expanding cryptocurrency seizures have faced criticism from some legal experts and crypto companies. Issues raised include:

• Using broad powers and limited court oversight for smaller seizures.
• Lack of transparency around what assets are targeted and why.
• Unintended impacts on legitimate crypto users and businesses.
• Weak due process protections for property owners.
• Unclear guidance on sanctions rules for crypto firms.

Critics say OFAC’s policies could hurt broader innovation and growth of cryptocurrency technology. There are also worries that overreaching sanctions could push more activity into illegal uses of crypto.

OFAC Compliance Issues for Crypto Companies

OFAC has made clear that crypto exchanges, wallet providers, miners, and others have to follow U.S. sanctions laws. This creates compliance challenges like:

• Building systems to screen transactions against OFAC’s sanctioned addresses and persons lists.
• Freezing or denying service to sanctioned groups trying to hide their identity.
• Adopting risk-based sanctions compliance programs.
• Training staff to spot and report any sanctions issues.

Firms can face civil fines from OFAC for sanctions violations. So having strong compliance is crucial, even with the technical difficulties and costs involved.

The Future of OFAC Cryptocurrency Enforcement

Based on recent policies, announcements, and seizures, OFAC will likely keep expanding its oversight of cryptocurrencies.