Order: Imposition of special measure prohibiting transmittals of funds involving Bitzlato (88 FR 3919)
Document text
Research, not advice. Part of the Bitcoin research archive (October 2026). Claims labelled unverified, contested or fringe are reported, not endorsed; statuses of bills and rules are as of the date checked. Government, court and patent records are public domain; the research notes are CC BY 4.0.
Federal Register / Vol. 88, No. 14 / Monday, January 23, 2023 / Rules and Regulations 3919
the RECA Trust Fund shall terminate on Accordingly, the Department will not DEPARTMENT OF THE TREASURY
the date that is 2 years after the law’s accept electronically submitted claims.
date of enactment. In addition, a claim Financial Crimes Enforcement Network
Claims bearing a date on and after
to which RECA applies shall be barred June 11, 2024, as indicated by the
unless the claim is filed not later than 31 CFR Part 1010
postmark or stamp by another
2 years after the date of enactment of the
commercial carrier, shall be returned to RIN 1506–AB42
Extension Act. Accordingly, the RECA
the submitting party due to untimely
Trust Fund terminates on June 8, 2024.
filing. Claims returned due to untimely Imposition of Special Measure
The statute of limitations for new RECA
filing will include a letter from the Prohibiting the Transmittal of Funds
claims tolls on that date. The Extension
Radiation Exposure Compensation Involving Bitzlato
Act is silent regarding whether the
RECA Trust Fund will be available for Program indicating the Department is AGENCY: Financial Crimes Enforcement
meritorious claims submitted at the barred by statute from reviewing the Network (FinCEN), Treasury.
statutory filing deadline. claim or awarding compensation.
ACTION: Order.
Statement of Policy This policy applies to all claims
received at the filing deadline, SUMMARY: FinCEN is issuing an order,
The Department is publishing this including the resubmission of a pursuant to the Combating Russian
document to articulate its policy that all previously denied claim under Sec. 8(b) Money Laundering Act, as amended by
timely filed, meritorious RECA claims of RECA. Resubmissions of previously the National Defense Authorization Act
against the RECA Trust Fund will be denied claims bearing a postmark or for Fiscal Year 2022, to prohibit certain
paid, consistent with the requirements stamp by another commercial carrier transmittals of funds (as defined in this
under RECA. Several stakeholders have dated June 11, 2024, or later shall be order) by any covered financial
expressed concern that the termination returned due to untimely filing. institution involving Bitzlato Limited
of the RECA Trust Fund on the deadline (Bitzlato), a financial institution
for claims may render it unavailable to For timely filed claims in which a operating outside of the United States
pay meritorious claims. Once a claim is share of the compensation award is held determined to be of a primary money
filed with the Department, RECA in trust pending documentation to laundering concern in connection with
imposes statutory obligations for the establish the eligibility of a potential Russian illicit finance.
Department to adjudicate the claim beneficiary, such shares of DATES: This action is effective February
within 12 months, and issue payment compensation shall be deemed rejected 1, 2023.
on any approved claims within 6 weeks consistent with 28 CFR 79.75(b) if FOR FURTHER INFORMATION CONTACT: The
of approval. RECA Sec. 6(d). These sufficient documentation to establish FinCEN Resource Center, 1–800–767–
statutory obligations will require the the eligibility of the potential 2825 or electronically at [email protected].
RECA Trust Fund to remain available beneficiary is not received by June 10,
SUPPLEMENTARY INFORMATION:
until the Department has determined 2024, or within the 12-month
entitlement for all timely filed claims, determination period provided by the I. Summary of Order
including claims filed on the statutory Act, whichever falls later. This order: (1) sets forth FinCEN’s
filing deadline.
This document is intended to inform determination that Bitzlato Limited
In addition, several stakeholders have (Bitzlato), a virtual asset service
the public of the Department’s policy
noted that the revised statutory filing provider (VASP) incorporated in the
regarding procedures for filing claims at
deadline, June 8, 2024, is a Saturday. Hong Kong Special Administrative
the statutory deadline. The Department
The Department shall deem claims that Region of the People’s Republic of
bear a date of June 10, 2024, on the will post this document to its RECA
website at www.justice.gov/civil/ China (Hong Kong), is a financial
postmark or stamp by another institution operating outside of the
commercial carrier, timely filed upon common/reca, and continue to
announce this policy at outreach events United States that is of primary money
their receipt by the Radiation Exposure laundering concern 1 in connection with
Compensation Program. This policy is and in communications with claimants,
counsel, and support groups. Russian illicit finance; and (2) prohibits
consistent with methods for computing certain transmittals of funds by any
time set forth at Federal Rule of Civil This document supersedes the domestic financial institution or
Procedure 6(a), and with standard Department’s notification of Procedures involving Bitzlato by any covered
agency practice where a deadline falls for Claims Submitted at the Statutory financial institution. Bitzlato, a
on a weekend or holiday establishing Filing Deadline, 85 FR 79118 (Dec. 9, convertible virtual currency (CVC)
the next business day as the deadline for 2020). exchanger (a type of VASP) with
submissions. The postmark requirement significant operations in Russia that
is consistent with the Department’s Dated: January 12, 2023.
C. Salvatore D’Alessio, Jr.,
offers exchange and Peer-to-Peer (P2P)
existing procedures for submitting services, is a financial institution of
claims at 28 CFR 79.71(a) and (b), Director, Torts Branch, Civil Division. primary money laundering concern in
requiring a claim to be submitted in [FR Doc. 2023–00865 Filed 1–20–23; 8:45 am] connection with Russian illicit finance,
writing on a standard claim form and BILLING CODE 4410–12–P namely, through: (1) its facilitation of
mailed to the address of the Radiation deposits and funds transfers by Russian
Exposure Compensation Program. In
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addition, this policy allows claimants to 1 The application of FinCEN’s authorities in this
affirmatively establish the timely filing order is specific only to section 9714 of the
of their claim by obtaining a postmark Combating Russian Money Laundering Act. It is not
or other mailing date stamp consistent intended to reflect the applicability of, or
with the filing deadline. obligations under, any provision of the Bank
Secrecy Act (BSA) or its implementing regulations,
The regulation at § 79.71(a) requires and FinCEN has not considered the extent to which
that claims be mailed to the Department. Bitzlato does business in the United States.
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3920 Federal Register / Vol. 88, No. 14 / Monday, January 23, 2023 / Rules and Regulations
ransomware groups 2 or affiliates, such Special measures one through four of associated with P2P exchanges.9
as Conti; 3 and (2) its facilitation of section 5318A(b), commonly known as Bitzlato further notes that its P2P
transactions with Russian darknet section 311 of the USA PATRIOT Act, services include arranging ‘‘storage of
markets on behalf of both darknet describe additional recordkeeping, digital assets . . . to ensure and
customers and darknet vendors. information collection, and reporting guarantee the execution of transactions
requirements that the Secretary may between registered users’’ and that it
II. Background
impose on covered U.S. financial retains the ability to ‘‘freeze [a user’s]
A. Statutory Provisions institutions. The fifth special measure, digital asset wallet,’’ indicating that
Section 9714(a) of the Combating codified at 31 U.S.C. 5318A(b)(5), Bitzlato has custody of its users’ digital
Russian Money Laundering Act, as allows the Secretary, in consultation wallets and the CVC held in those
amended by section 6106(b) of the with the Secretary of State, the Attorney accounts.10
National Defense Authorization Act for General, and the Chairman of the Board
of Governors of the Federal Reserve In light of those activities, Bitzlato is
Fiscal Year 2022 (hereafter section
9714(a)),4 provides, in relevant part, that System, to prohibit, or impose a financial institution within the
should the Secretary of the Treasury conditions upon, the opening or meaning of section 9714(a). Section
determine reasonable grounds exist for maintaining in the United States of 9714(a) does not expressly define the
concluding one or more financial correspondent or payable-through term ‘‘financial institution.’’ However,
institutions operating outside of the accounts by any domestic financial FinCEN has long defined that term to
United States is of primary money institution or domestic financial agency apply to foreign and domestic ‘‘money
laundering concern in connection with for, or on behalf of, a foreign banking transmitters’’, including persons that
Russian illicit finance, the Secretary, by institution, if such correspondent accept and transmit value that
order, regulation, or otherwise as account or payable-through account substitutes for currency, such as CVC.11
permitted by law may require domestic involves one or more financial CVC exchangers, such as Bitzlato, are
financial institutions and domestic institutions operating outside of the ‘‘money transmitters,’’ and therefore,
financial agencies to take 1 or more of United States that the Secretary has financial institutions within the
the special measures described in 31 found to be of primary money meaning of section 9714(a).
U.S.C. 5318A(b) 5 or prohibit, or impose laundering concern.
conditions upon, certain transmittals of Based on public and non-public
B. Bitzlato information available to FinCEN,
funds (to be defined by the Secretary) by
any domestic financial institution or According to its website, Bitzlato is a Bitzlato operates outside the United
domestic financial agency, if such ‘‘modern company working in the field States and, although identified as
transmittal of funds involves any such of blockchain technologies and ‘‘registered under the laws of Hong
institution, The authority of the [CVC].’’ 7 It was previously known as Kong,’’ Bitzlato has significant ties to
Secretary of the Treasury (the Secretary) ChangeBot. Bitzlato is a Russian- and connections with Russia. Under
to administer both section 9714(a) and affiliated CVC exchanger—a category of ‘‘Section 1. Terms and Definitions’’ in
the Bank Secrecy Act (BSA) has been VASP—that offers exchange and P2P Bitzlato’s ‘‘Terms of Service’’ page on its
delegated to FinCEN.6 services, allowing users to exchange website, Bitzlato is identified as
Bitcoin (BTC), Ether (ETH), Bitcoin Cash ‘‘registered under the laws of Hong
2 A ransomware ‘‘strain’’ is the specific kind of (BCH), Litecoin (LTC), Dash (DASH), Kong’’ and ‘‘located at Unit 617, 6/F,
malware that encrypts or exfiltrates data from a Tether (USDT), Monolith Ruble (MCR) 131–132 Connaught Road West, Solo
victim in order to perpetrate cyber extortion. The and Dogecoin (DOGE) without
developers and owners of a strain are referred to as workshops, Hong Kong.’’ 12 A review of
a ransomware ‘‘gang’’ or ‘‘group,’’ and may use a intermediaries and hidden publicly available material, however,
strain for their own extortion activities or lease commissions. shows that Bitzlato’s actual location of
access to the strain to other illicit actors (affiliates) As set out on its website, Bitzlato is operation, its employees, and a job
for use in a ‘‘Ransomware as a Service’’ (RaaS) an online platform that provides
model. As a specific strain becomes less effective opening are in Russia, with job
or more detectable, the group may develop a new exchange and P2P services. Through its descriptions written in Russian. Indeed,
strain to continue its business. For example, ‘‘Conti exchange services, Bitzlato organizes
a study performed by a blockchain
v2’’ is the second strain developed by the Conti ‘‘trading for digital assets, their
ransomware group, the first of which is ‘‘Conti.’’ A analysis company expressly identifies
derivatives and other market
ransomware actor who has used both the Conti Bitzlato as having a presence in Moscow
strain and the Phobos strain in their attacks is both instruments’’ with ‘‘[t]rading conducted
City (the financial district of Moscow,
a Conti and a Phobos affiliate. via standard contracts or orders.’’ 8 In
3 As noted above, in fn. 3, Conti refers to both a parallel, through its P2P services, Russia) during the period between 2019
criminal group, the eponymous ransomware strains Bitzlato operates as ‘‘an advertising and 2021,13 and FinCEN has found no
it spawned, and other affiliated actors.
board for digital assets traders’’ offering information on current or former
4 Section 9714 (as amended) can be found in a
wallet, escrow and other related services employees or positions in Hong Kong.
note to 31 U.S.C. 5318A.
5 31 U.S.C. 5318A of the United States Code 9 Id.
grants the Secretary the authority, upon finding that for Terrorism & Financial Intelligence re-delegated 10 Id.
reasonable grounds exist for concluding that one or to the Director of FinCEN the authority of the
11 See 31 U.S.C. 5312; 31 CFR 1010.100(t)(3),
more financial institutions operating outside of the Secretary under section 9714.
United States is of primary money laundering 7 Unless noted otherwise, all references to 1010.100(ff), 1010.605(f)(iv); see also FIN–2019–
concern, to require domestic financial institutions Bitzlato’s official website, web page, or policies are G001, ‘‘Application of FinCEN’s Regulations to
Certain Business Models Involving Convertible
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and domestic financial agencies to take certain sourced from pages and links accessed via https://
‘‘special measures.’’ bitzlato.com, including https://bitzlato.com/terms- Virtual Currencies’’ (May 9, 2019); FIN–2013–G001,
6 Pursuant to Treasury Order 180–01 (January 14, of-service-bitzlato/, https://bitzlato.com/anti- ‘‘Application of FinCEN’s Regulations to Persons
2020), the authority of the Secretary of the Treasury money-laundering-policy-and-know-your-client- Administering, Exchanging, or Using Virtual
to administer the BSA, including but not limited to policy, and https://bitzlato.com/knowledgebase/ Currencies’’ (March 18, 2013).
12 Bitzlato, https://bitzlato.com/terms-of-service-
31 U.S.C. 5318A, has been delegated to the Director how_to_buy_cryptocurrency/ (last accessed January
of FinCEN. On August 11, 2022, and in accordance 2023). bitzlato/ (last accessed January 2022).
with Treasury Order 101–05 (September 20, 2022) 8 Bitzlato, https://bitzlato.com/terms-of-service- 13 Chainalysis, ‘‘The 2022 Crypto Crime Report,’’
and 31 U.S.C. 321(b), Treasury’s Under Secretary bitzlato/ (last accessed January 2023). at 128 (February 2022).
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Federal Register / Vol. 88, No. 14 / Monday, January 23, 2023 / Rules and Regulations 3921
III. Finding That Bitzlato Is a Financial as in the 2021 JBS meatpacking plant exchanges and darknet markets,
Institution Operating Outside of the attack.17 The U.S. government has long representing the laundering of victim
United States of Primary Money engaged on efforts to counter the threat payments by Russian and Russia-
Laundering Concern in Connection of ransomware, and on April 1, 2015, affiliated actors through Russian and
With Russian Illicit Finance the President issued Executive Order Russia-affiliated services. As such,
Based on public and non-public (E.O.) 13694 (‘‘Blocking the Property of ransomware is a conduit for Russian
information available to FinCEN, Certain Persons Engaging in Significant illicit finance.
FinCEN finds that reasonable grounds Malicious Cyber-Enabled Activities’’), in
2. Bitzlato’s Ransomware Connections
exist for concluding that Bitzlato, a P2P which he declared a national emergency
CVC exchanger with significant to deal with the threat of the ‘‘increasing Bitzlato plays a critical role in
operations in Russia, is a financial prevalence and severity of malicious facilitating transactions for the Conti
institution of primary money laundering cyber-enabled activities originating ransomware group and other global
concern in connection with Russian from, or directed by persons located, in ransomware actors, including actors that
illicit finance, namely, through: (1) its whole or in substantial part, outside the operate out of Russia. As a result,
facilitation of deposits and funds United States [that] constitute an FinCEN assesses that Bitzlato serves as
transfers by Russian ransomware groups unusual and extraordinary threat to the a VASP that ultimately enables the
or affiliates, such as Conti; and (2) its national security, foreign policy, and profitability of ransomware attacks and,
facilitation of transactions with Russian economy of the United States.’’ 18 at least in the case of Conti, advances
darknet markets on behalf of both In 2021, roughly 74 percent of the political and economic
darknet customers and darknet vendors. ransomware revenue, or over $400 destabilization interests of the
million worth of CVC, went to strains Government of Russia.
A. Bitzlato Is Used To Facilitate highly likely to be affiliated with
Processing and Laundering Proceeds a. Conti Ransomware Group
Russian organizations. Blockchain
From Ransomware Attacks analysis combined with web traffic data Conti, a notorious Ransomware-as-a-
1. Background on Ransomware further revealed that most of the Service (RaaS) group and the
extorted funds from the ransomware eponymous strains of ransomware it
Ransomware is a form of malicious offers as a service to affiliated criminals
software (malware) used by an attacker attacks were laundered through services
primarily catering to Russian users.19 for their use, emerged in December
to block access to a computer system or 2019.21 Although most such groups take
The media have reported on banks
data, often by encrypting data or steps to obfuscate their connections to
and stock exchanges being targets for
programs on information technology Russia and Russian illicit finance, Conti
ransomware attacks.20 Further, the U.S.
(IT) systems. Its purpose is to extort did not. To the contrary, on February
financial system is being used to send
ransom payments from victims in 25, 2022, Conti pledged allegiance to the
significant amounts of U.S. funds as
exchange for decrypting the Government of Russia and vowed to
ransom payments to foreign actors—
information, restoring victims’ access to retaliate against international state
both cybercriminals and nation-state
their systems or data, and/or not actors for their support of the
actors. Consequently, ransomware
disclosing or destroying data or Government of Ukraine amidst the
attacks are a direct threat to the U.S.
programs on IT systems. Ransomware Russian invasion.22 Further, a cache of
economy, to its citizens, and to its
payments are made most often via CVC, 60,000 leaked chat messages and files
national security. Moreover, the threat
which are preferred by ransomware from Conti appears to link Conti to the
of ransomware is not limited to the
attackers for their ability to obscure the Russian state, including the Russian
United States, as ransomware attacks are
attackers’ identities, thus aiding in the Federal Security Service.23
on the rise across the globe, posing a
attackers’ ability to launder their FinCEN has documented numerous
significant threat to governments,
criminal proceeds and continue transactions between Conti-associated
businesses, and institutions on several
attacking victims.14 CVC addresses and Bitzlato.
According to open source reporting, continents.
Although ransomware actors and
ransomware attacks have increased b. Other Ransomware Groups
darknet markets are not always state-
exponentially over the last several years, Separately, based on blockchain
affiliated, the notorious ransomware
with an estimated 300 million analysis, other ransomware groups have
group Conti has significant connections
attempted attacks in the first half of used Bitzlato to facilitate transactions
to Russia and pledged allegiance to
2021 alone, 15 including attacks against involving ransomware, including
Russia on February 25, 2022. Further,
U.S. entities and institutions. These ransomware groups based in or linked
the Hydra darknet market almost
attacks have destabilized private to Russia. For example, blockchain
entirely catered to Russian customers
businesses, healthcare facilities, school analysis has identified transactions
and illicit goods and service providers
districts, and critical infrastructure— involving Bitzlato and: (1) Chatex, a
before it was shut down by law
including domestic energy distribution, VASP designated by Treasury’s Office of
enforcement in April 2022. The illicit
such as in the 2021 Colonial Pipeline Foreign Assets Control (OFAC) for
gains from ransomware attacks can often
attack, 16 and food supply chains, such facilitating financial transactions for
be traced back to Russian-affiliated
14 See, e.g., FIN–2021–A004, ‘‘Advisory on
ransomware actors; and (2) the RaaS
Ransomware and the Use of the Financial System do for the country,’’ Washington Post (May 19, group DarkSide, a Russian-speaking
to Facilitate Ransom Payments’’ (November 8, 2021).
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17 ‘‘Meatpacker JBS says it paid equivalent of $11 21 Abrams, Lawrence. ‘‘Conti ransomware shows
2021), available at https://www.fincen.gov/sites/
default/files/advisory/2021-11-08/ mln in ransomware attack,’’ Reuters (June 10, 2021). signs of being Ryuk’s successor,’’ Bleeping
FinCEN%20Ransomware%20Advisory_FINAL_ 18 This E.O. was amended on December 28, 2016, Computer (July 9, 2020).
508_.pdf. pursuant to E.O. 13757. 22 Bing, Christopher. ‘‘Russia-based ransomware
15 ‘‘Mid-year Update 2021 Cyber Threat Report: 19 Chainalysis, ‘‘The 2022 Crypto Crime Report,’’ group Conti issues warning to Kremlin foes,’’
Cyber threat intelligence for navigating today’s at 123 (February 2022). Reuters (February 25, 2022).
business reality,’’ Sonicwall. 20 Egan, Matt. ‘‘Banks and stock exchanges are 23 Burgess, Matt. ‘‘After Declaring Support for
16 Bogage, Jacob. ‘‘Colonial Pipeline CEO says even bigger targets for ransomware attacks,’’ CNN Russian Invasion, Conti Ransomware Gang Hit With
paying $4.4 million ransom was the right thing to (May 12, 2021). Data Leak,’’ Wired (March 18, 2022).
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3922 Federal Register / Vol. 88, No. 14 / Monday, January 23, 2023 / Rules and Regulations
group responsible for the Colonial B. Bitzlato Is Used To Facilitate Darknet were attributed to the Hydra darknet
Pipeline Company ransomware incident Markets and Scams market alone. That comparison
in May 2021.24 25 Based on blockchain In addition to receiving ransomware illustrates that Bitzlato either had a
analysis, 76 Bitzlato deposit addresses proceeds, Bitzlato’s receiving and substantially higher appetite for
received bitcoin (BTC) worth over sending transactional activity shows a engaging with this illicit darknet market
$300,000 attributed to Chatex. On significant connection to counterparties than a U.S.-registered VASP and/or that
November 8, 2021, OFAC designated associated with other suspected illicit Bitzlato did not have the appropriate
Chatex, pursuant to E.O. 13694, as activities, such as darknet markets and controls to identify and prevent Hydra’s
amended, for its part in facilitating scams with ties to and operations in illicit activity from flowing through it.
funds transfers for ransomware actors Although Hydra has been shut down,
Russia.
and for providing material support to Approximately two-thirds of Bitzlato continues to facilitate
SUEX OTC, S.R.O. (SUEX). SUEX, a Bitzlato’s top receiving and sending transactions for growing Russia-
CVC exchanger located in Moscow City, connected darknet markets. As of June
counterparties are associated with
Russia, was itself designated by OFAC 2022, Bitzlato’s top counterparties by
darknet markets or scams. For example,
on September 21, 2021, pursuant to E.O. total number of transactions included
Bitzlato’s top three receiving
13694, as amended, for providing three other Russian darknet markets:
counterparties, by total amount of BTC
material support to the threat posed by BlackSprut, OMG!OMG!, and Mega.30
received between May 2018 and
criminal ransomware actors.26 Since Hydra’s closure in April 2022,
September 2022 were: (1) Binance, a
According to media reporting in 2021, these three darknet markets show
VASP; (2) the Russia-connected darknet
the RaaS group DarkSide, a Russian- notably increased transaction volumes
market Hydra; and (3) the alleged
speaking group responsible for the with Bitzlato as one of their top
Russia-based Ponzi scheme
Colonial Pipeline Company ransomware counterparties by total sending and
‘‘TheFiniko.’’ Similarly, Bitzlato’s top
incident in May 2021, along with its receiving volumes. Bitzlato’s continued
three sending counterparties, by total
clientele, also used Bitzlato.27 In facilitation of Russian darknet markets
amount of BTC sent between May 2018
addition, the Phobos ransomware group further illustrates its ongoing
and September 2022 were (1) Hydra; (2)
and its affiliates have made at least engagement with actors connected with
Local Bitcoins, a VASP based/
1,063 direct transfers of funds in the Russian illicit finance and raises
incorporated in Finland; and (3)
form of BTC to at least 76 Bitzlato primary money laundering concerns.
‘‘TheFiniko.’’ The majority of these
deposit addresses identified as having receiving and sending counterparties C. Bitzlato Has Engaged in a Significant
received funds from Chatex, have evident ties to and/or significant Volume of Russian Illicit Finance
representing 414.84 BTC worth operations in Russia. Moreover, FinCEN Transactions
approximately $3 million. notes that Bitzlato engaged in significant According to a study performed by a
According to public reporting, a transactions with each of these blockchain analysis company of seven
spokesperson for Bitzlato denied that it counterparties—all of whom are VASPs associated with Moscow City,
worked with any ransomware criminals associated with illicit activities—after Russia, between 2019 and 2021, Bitzlato
and claimed it was not acquainted with publishing its AML/KYC policy (further received CVC worth $206 million from
an organization called DarkSide.28 described below), demonstrating the darknet markets, $224 million from
However, even if Bitzlato is not permissive or ineffective nature of its scams, and $9 million from ransomware
knowingly affiliated with DarkSide or internal controls. attackers, with the value of transactions
other ransomware groups, FinCEN As noted above, dealings with the involving Russian illicit finance or
assesses that it provides an enabling Russia-connected darknet market Hydra otherwise risky sources quantified as 48
environment for such ransomware represented a notable percentage of percent of all known Bitzlato
criminals to utilize its services to cash Bitzlato’s business. Bitzlato operated as transactions.31 This is the largest
out ransomware proceeds due to its a facilitator of sales and purchases of
minimal Anti-Money Laundering/ proportion of illicit funds received by
illicit goods and services on behalf of all seven businesses analyzed during
Countering the Financing of Terrorism customers and vendors operating on
(AML/CFT) protocols, solidifying its that time, with the second largest being
Hydra and supported a larger proportion SUEX, at 37 percent. SUEX, a CVC
reputation as a go-to CVC exchanger for of business involving Hydra than
such groups.29 exchanger located in Moscow-City,
comparable U.S. CVC exchangers. Prior Russia, was itself designated by OFAC
to its designation by OFAC in April on September 21, 2021, pursuant to E.O.
24 Kramer, Andrew; Schwirtz, Michael; and
2022 and its closure in a law 13694, as amended, for providing
Troianovski, Anton. ‘‘Secret Chats Show How
Cybergang Became a Ransomware Powerhouse,’’ enforcement operation, Russia- material support to the threat posed by
N.Y. Times (June 3, 2021). connected Hydra was the largest darknet criminal ransomware actors.
25 Department of State, ‘‘Reward Offers for market in the world, representing nearly
Information to Bring DarkSide Ransomware Variant 80 percent of all traceable darknet D. Bitzlato Does Not Adequately Combat
Co-Conspirators to Justice,’’ (November 4, 2021), Money Laundering and Illicit Financing
https://www.state.gov/reward-offers-for-
market transactions in 2021. Bitzlato
information-to-bring-darkside-ransomware-variant- processed over 1.46 million direct on its Platform
co-conspirators-to-justice. transfers with the Hydra darknet Although Bitzlato’s homepage states
26 Department of the Treasury, ‘‘Treasury
marketplace between May 2018 and that it has a ‘‘Know Your Client [(KYC)]
Continues to Counter Ransomware as Part of early April 2022, representing
Whole-of-Government Effort; Sanctions policy,’’ public reporting shows that
transactional flows of nearly 20,000 BTC Bitzlato does not effectively implement
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Ransomware Operators and Virtual Currency
Exchange’’ (November 8, 2021), https:// sent and received during that timeframe.
home.treasury.gov/news/press-releases/jy0471. Comparative analysis of Bitzlato to a 30 Blockchain analysis identifies BlackSprut,
27 Brewster, Thomas. ‘‘As Ransomware Hackers
large U.S.-registered CVC exchanger OMG!OMG! and Mega as Russian darknet markets
Sit On Millions In Extorted Money, America’s that offer narcotics and potentially other illicit
Military Is Urged To Hack Back,’’ Forbes (June 5,
indicates that less than .01 percent of
goods. Open source reporting has likewise flagged
2021). the U.S. exchanger’s transactions were that these darknet markets are Russian.
28 Id. attributed to darknet markets, whereas 6 31 Chainalysis, ‘‘The 2022 Crypto Crime Report,’’
29 See Section III.C–D. to 8 percent of Bitzlato’s transactions at 128 (February 2022).
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Federal Register / Vol. 88, No. 14 / Monday, January 23, 2023 / Rules and Regulations 3923
policies and procedures designed to activity on the part of its Users [sic].’’ 36 A. The Extent to Which Bitzlato Is Used
combat money laundering and illicit Bitzlato further states that it implements To Facilitate or Promote Money
finance, and in fact, has advertised that a verification procedure, and employs Laundering in Connection With Russian
it lacks such policies, procedures, or an official responsible for compliance Illicit Finance, Including Through
internal controls. with AML standards, transaction Connections to Money Laundering
Notwithstanding its stated AML/KYC monitoring and risk assessment. Activity by Organized Criminal Groups
policy, Bitzlato advertises the utility of The record amply establishes that
‘‘simple registration’’ and does not In light of its advertised ‘‘simple
registration without KYC’’ and exchange Bitzlato has significant ties to Russia
collect the types of information and facilitates a significant number of
typically used to conduct effective processes, Bitzlato’s previously stated
AML/KYC policy and controls appear to money laundering transactions
(AML/CFT).32 As of March 2022, involving Russia-related ransomware
Bitzlato’s website advertised ‘‘simple have little impact on its actual
and Russia-related darknet market
registration without KYC’’ with ‘‘. . . operations. In practice, Bitzlato does not
proceeds.
neither selfies nor passports required. appear to be collecting the identifying Bitzlato’s significant connections to
Only your email [is] needed . . .’’ for information that would be necessary to Russia are evidenced by the following:
account creation and transactions on facilitate meaningful KYC analysis. The (1) Moscow, Russia is the listed location
Bitzlato’s platform.33 As of September significant quantity of Bitzlato for Bitzlato found on public websites,
2022, Bitzlato’s advertisement had transactions involving ransomware and with a recent study performed by a
become more circumspect, offering darknet market actors provides further blockchain analysis company expressly
‘‘simple registration’’ with ‘‘[o]nly your evidence that Bitzlato is not following identifying Bitzlato as having a presence
email needed.’’ 34 Nevertheless, neither its stated AML/KYC policy or in Moscow City, Russia (during the
advertisement indicates that Bitzlato identifying suspicious transactions in a period between 2019 and 2021); 37 (2)
requires or collects the types of way that would allow it to identify and the vast majority of its customer base is
information that would be expected or halt the use of its platform by illicit located in Russia; (3) historical Bitzlato
needed as a part of a set of policies and website information claimed it was
actors.
procedures designed to combat money created by persons in Russia; (4) a
laundering and illicit finance. IV. Analysis Regarding Finding That registered address in Hong Kong that is
Additionally, Bitzlato advertises user- Bitzlato Is a Financial Institution a Solo Workshops address—a shared
privacy and anonymity, allowing one to Operating Outside of the United States workspace that other Russian
buy and sell CVC with ‘‘a P2P fiat-to- That Is of Primary Money Laundering companies use as their address of
crypto exchange,’’ further stating, ‘‘you Concern in Connection With Russian record; (5) as of May 2022, an internet
exchange fiat money and Illicit Finance job posting for Bitzlato advertised for a
cryptocurrency directly with another management position in Russia; and (6)
person.’’ 35 This exchange process FinCEN was guided in its analysis by in providing an example of a means to
allows for transfers to or from a the following considerations: (1) the purchase or cash out CVC with/to fiat
traditional financial institution, as well extent to which the institution is used currency, Bitzlato cites transfers in
as other traditional methods, and to facilitate or promote money rubles to or from bank accounts with
emphasizes that it does not require laundering in connection with Russian Sberbank, a prominent Russian financial
users to go through the sort of extensive illicit finance, including through institution that is the subject of Russia-
KYC procedures that are required on connections to money laundering related sanctions administered and
other exchanges. Furthermore, publicly activity by Russian organized criminal enforced by OFAC.
available information published by third groups; (2) the extent to which the Furthermore, Bitzlato has significant
parties indicates that, notwithstanding institution is used for legitimate links to Russian illicit finance and
Bitzlato’s public statements regarding its Russian criminal actors. A review of
business purposes; and (3) the extent to
AML/KYC policy, verification may not illicit actors’ direct exposure to Bitzlato
which action by FinCEN would guard
be required. shows that a majority of those illicit
On its website as of March 2022, against international money laundering
actors were based in, or had ties to,
Bitzlato purported to maintain an AML/ and other financial crimes. While these
Russia and Russia-based cybercriminal
KYC policy designed to prevent and considerations were drawn from factors forums. Russian ransomware groups or
reduce the potential risks of Bitzlato identified in 31 U.S.C. 5318A(c)(2)(B), affiliates, such as Russia-affiliated Conti,
being involved in any illegal activity, taking into account the specific have been observed using Bitzlato. In
stating that ‘‘in accordance with circumstances of money laundering particular, CVC wallet addresses
international and local regulations, activities in connection with Russian associated with the Conti ransomware
Bitzlato implements effective internal illicit finance and the protection of U.S. strain and its affiliates, including
procedures and mechanisms to prevent national security and the U.S. financial Trickbot, have engaged in significant
money laundering, terrorist financing, system, FinCEN is under no obligation BTC transactions involving Bitzlato.
drug and human trafficking, the pursuant to section 9714(a) to consider Additionally, Bitzlato had a significant
proliferation of weapons of mass any particular factor or set of factors transaction history with the Russia-
destruction, corruption and bribery and when making a finding that a financial connected Hydra darknet marketplace
to respond to any form of suspicious institution operating outside of the and continues to facilitate transactions
United States is of primary money for Russia-connected darknet
marketplaces BlackSprut, OMG!OMG!,
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32 Bitzlato, https://bitzlato.com (last accessed
laundering concern in connection with
January 2023). and Mega. That Bitzlato is registered in
33 Bitzlato, https://bitzlato.com (accessed March Russian illicit finance.
2022).
Hong Kong (or that it maintains a
34 Bitzlato, https://bitzlato.com (accessed registered office in Hong Kong) does not
September 2022 and last accessed January 2023). alter FinCEN’s assessment that Bitzlato
35 ‘‘Bitzlato Review,’’ CryptoNews, (accessed 36 Bitzlato, https://bitzlato.com/anti-
March 22, 2022), available at https:// moneylaundering-policy-and-know-your-client- 37 Chainalysis, ‘‘The 2022 Crypto Crime Report,’’
cryptonews.com/reviews/bitzlato/. policy (last accessed January 2023). at 128 (February 2022).
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3924 Federal Register / Vol. 88, No. 14 / Monday, January 23, 2023 / Rules and Regulations
is of money laundering concern in C. The Extent to Which Action by A. Whether Similar Action Has Been or
connection with Russian illicit finance. FinCEN Would Guard Against Is Being Taken by Other Nations or
Section 9714(a) does not require that a International Money Laundering and Multilateral Groups
foreign financial institution be Other Financial Crimes FinCEN is unaware of any action that
registered or incorporated in Russia to Finding Bitzlato to be a financial has been taken or is being taken by other
fall within its scope. The statute only institution operating outside of the nations or multilateral groups with
requires that FinCEN determine that the United States of primary money regard to Bitzlato. FinCEN, however,
institution is a primary money laundering concern in connection with believes that the action will provide a
laundering concern in connection with Russian illicit finance, and prohibiting strong signal to the international
Russian illicit finance. That may occur, transmittals of funds, will help insulate community of the risks posed by
as it does in the case of Bitzlato, where the U.S. financial system from Bitzlato and urges counterpart
the financial institution facilitates international money laundering and jurisdictions to consider such risks in its
money laundering transactions for funds other financial crimes. It will further supervision of VASPs.
derived from illegal activity or the reinforce the importance of AML/CFT B. Whether the Imposition of Any
proceeds of illegal activity and that compliance in the virtual asset space, Particular Special Measure Would
those activities have a nexus to Russia. help protect the national security of the Create a Significant Competitive
Given Bitzlato’s significant connections United States, notify financial Disadvantage, Including Any Undue
to Russia and links to Russian illicit institutions around the world of Cost or Burden Associated With
finance and Russian criminal actors, the Bitzlato’s illicit activity, and set an Compliance, for Financial Institutions
record demonstrates that, in this case, example for other international partners Organized or Licensed in the United
the statutory threshold under section to follow in the fight against illicit States
9714(a) is met. finance and criminal actors.
FinCEN assesses that imposing a
V. Considerations in Selecting the prohibition on certain transmittals of
B. The Extent to Which Such
Special Measure Prohibiting funds involving Bitzlato will not present
Institutions, Transactions, or Types of
Transmittals of Funds a significant competitive disadvantage
Accounts Are Used for Legitimate
Business Purposes Section 9714(a) does not require for financial institutions organized or
consideration of particular factors in licensed in the United States given
The record further amply determining which one or more special Bitzlato’s relatively small size, and the
demonstrates that Bitzlato’s services are measures to apply to address an relatively limited burden that
used, to an unusually large extent, to identified primary money laundering compliance with this order would
facilitate illicit finance, particularly concern. Nevertheless, although not impose.
when compared to other CVC bound by the factors, FinCEN By U.S. and international standards,
exchanges, and by illicit actors who considered, in this instance, the factors Bitzlato represents a limited percentage
seek to circumvent AML/CFT identified in 31 U.S.C. 5318A(a)(4)(B) to of daily CVC transfers. As of April 2022,
obligations and obfuscate the source of help guide its analysis in this matter Bitzlato maintained a daily BTC balance
funds or their intended use. Bitzlato and FinCEN elected to perform that was 0.0185 percent as large as the
lacks an adequate AML/CFT program or interagency consultations 38 prior to largest U.S.-domiciled CVC exchange,
issuing this order. and it has 0.55 percent as many BTC
safeguards, it has a high ratio of illicit
Guided by the following factors, transfers. Bitzlato’s transaction history
transaction exposure relative to total
FinCEN finds reasonable grounds exist with this same U.S.-domiciled CVC
transaction volume when compared to
for concluding that Bitzlato is a exchange totals fewer than $26 million
other exchanges, and it has served as the in CVC over four years. By contrast, a
financial institution operating outside of
second largest attributable counterparty CVC price and volume aggregator
the United States that is of primary
for the largest darknet market in the money laundering concern in estimates that a large U.S.-domiciled
world and continues to support Russia- connection with Russian illicit finance exchanger processed more than $2.7
connected darknet markets. and that, pursuant to section 9714(a)(2), billion in transfers daily. Further,
Although Bitzlato offers services that the imposition of a special measure compliance with the prohibition on
could potentially be used by licit actors, prohibiting certain transmittals of funds certain transmittals of funds set out in
those services may be found other involving Bitzlato is warranted. this order requires no tools or
VASPs, including VASPs located in competencies other than those already
jurisdictions with robust AML/CFT 38 In connection with this action, FinCEN employed by domestic financial
consulted with staff at the following Departments institutions to maintain their current
frameworks and regulatory oversight. and agencies with regard to the proposed order and
Legitimate actors have access to a broad prohibition: Department of Justice; the Department
AML/CFT compliance programs. In
range of comparable services that of State; the Board of Governors of the Federal order to ensure that is the case, FinCEN
provide for appropriate transparency Reserve System; the Federal Deposit Insurance has elected to provide within this order
Corporation the Securities and Exchange for the rejection of certain transmittals
and can support international efforts to Commission; the Commodity Futures Trading
of CVC that are received from or
protect the integrity of the international Commission; the Office of the Comptroller of the
Currency; and the National Credit Union originate at Bitzlato and outline the
financial system, including transactions
Administration Board. These consultations steps a covered financial institution
involving CVC. Accordingly, given the involved sharing drafts and information for the should take in such circumstances.
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extensive flow of illegitimate funds purpose of obtaining interagency views on the
In providing for the rejection of CVC
through Bitzlato, FinCEN believes that imposition of a prohibition on certain transmittals
of funds by any domestic financial institution from under certain limited circumstances,
the need to protect U.S. financial or to Bitzlato, or from an account or CVC address FinCEN acknowledges that, at this time,
institutions from the money laundering administered by or on behalf of Bitzlato, and the there are technological limitations that
risks presented by Bitzlato outweighs effect that such a prohibition would have on the
domestic and international financial system. Each
may limit or preclude covered financial
any potential legitimate utility its of the Departments and agencies concurred in the institutions from declining CVC
services may provide. issuance of this order. transfers originating at addresses
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Federal Register / Vol. 88, No. 14 / Monday, January 23, 2023 / Rules and Regulations 3925
outside of their control, and as such, illegitimate business, this action will imposition of conditions on the
compliant institutions may find remove from transaction chains a VASP transmittal of funds, as an alternative to
themselves in receipt of CVC from that facilitates illicit or otherwise a prohibition on the transmittal of
Bitzlato despite a desire and effort to unduly risky transactions that pose a funds. However, prohibiting the
limit such exposure.39 As such, this risk to the international financial transmittal of funds involving Bitzlato is
order allows covered financial system, without clear adverse impact on the only means of adequately addressing
institutions the flexibility to act with the international payment, clearance, the threat Bitzlato poses.
discretion based on the facts and and settlement system or on legitimate In particular, none of the special
circumstances of a particular transaction business activities currently involving measures described in 31 U.S.C. 5318A
and comply with this order, even where Bitzlato. would effectively address the threat
the originating address is no longer As FinCEN is not aware of timing posed by Bitzlato.40 Any additional
accessible, where CVC originated from considerations associated with such recordkeeping, information collection,
Bitzlato but were held for an extended service redundancy or availability, there or reporting requirement would be
period of time in an unhosted wallet, or is also no adverse impact associated insufficient to guard against the risks
where the covered financial institution’s with the timing of this action. posed by covered financial institutions
risk mitigation procedures would processing transmittals of funds
D. The Effect of the Action on U.S.
preclude returning funds to Bitzlato. involving Bitzlato, as such measures
National Security and Foreign Policy
Moreover, by providing for the rejection may allow such transfers to continue to
of CVC, this order ensures that covered Given Bitzlato’s connection with benefit of illicit actors connected to
financial institutions will not be subject Russian illicit finance, FinCEN believes Russian ransomware activities, darknet
to an undue cost or burden associated that this action is necessary to safeguard markets, and scams. Furthermore,
with compliance. U.S. national security and the U.S. placing condition upon or prohibiting
financial system, as well as serve key the opening or maintaining in the
C. The Extent to Which the Action or the U.S. national security objectives. United States of a correspondent
Timing of the Action Would Have a Targeting illicit proceeds obtained by account or payable-through account by
Significant Adverse Systemic Impact on ransomware actors, especially those any domestic financial institution or
the International Payment, Clearance, with a nexus to Russia, is a high priority domestic financial agency for or on
and Settlement System, or on Legitimate for the United States, as evidenced by behalf of a foreign banking institution,
Business Activities Involving Bitzlato recent OFAC actions and recently as described in 31 U.S.C 5318A(b)(5), is
FinCEN believes that, for the reasons established intergovernmental task similarly inadequate to address the risks
described below, this action will not forces focused on Russia-related illicit of a P2P VASP such as Bitzlato. The
have an adverse systemic impact, and finance threats. As such, this action will types of CVC transactions that Bitzlato
indeed, will have a positive systemic complement previous actions taken by facilitates do not rely on correspondent
impact on the international payment, the U.S. Government and will serve the or payable-through accounts between
clearance, and settlement system, and United States’ national security and domestic financial institutions and
on legitimate business activities. foreign policy interests by protecting foreign banks, and FinCEN is unaware
Bitzlato is a small exchange and has U.S. businesses and interests from of such relationships between Bitzlato
a relatively limited presence in the known ransomware threat actors, by and U.S. or foreign financial
international payment system. As noted publicly countering a financing institutions. As such, prohibiting or
above, by comparison to U.S.-domiciled mechanism used by illicit entities, placing conditions upon the opening of
CVC exchanges, Bitzlato represents a including entities that seek to further such accounts would be ineffective at
relatively limited percentage of daily the Russian state’s aims of political and addressing the money laundering
CVC transfers, by volume. There is no economic destabilization, and by concern.
evidence that Bitzlato is a major reinforcing the expectations of AML/ For these reasons, FinCEN assesses
participant in the international payment CFT compliance in the virtual asset that the prohibition on the transmittal of
system or relied upon by the ecosystem in order to improve the funds, including CVC, involving
international banking community. identification and reporting of Bitzlato is the most appropriate special
Rather, given its size and limited suspicious activity by financial measure.
international presence, the legitimate institutions and agencies around the
VII. Consideration for Imposing the
business services that it offers would be world.
Special Measure Prohibiting Certain
readily available through other VI. Consideration of Alternative Special Transmittals of Funds by Order
regulated institutions. Measures
Given the redundancy and availability Section 9714(a) permits the Secretary
of its services as well as its clear use for FinCEN considered the other special to impose certain special measures,
measures available pursuant to section including the prohibition of certain
39 FinCEN notes that CVC payment systems are 9714 prior to selecting the prohibition transmittals of funds, ‘‘by order,
often designed to limit the control of specific reflected in this order. Pursuant to
financial institutions over transactions and to section 9714, these measures included: 40 Likewise, imposing conditions on transmittals
prevent rejections of funds by persons or entities of funds, pursuant to section 9714(a)(2), would be
other than the sender of funds. As a result, although
(1) the special measures described in 31
insufficient to address the threat. While imposing
covered financial institutions may institute an U.S.C. 5318A, including the imposition conditions, rather than a full prohibition, may be
internal prohibition on the sending of CVC of additional recordkeeping, appropriate in circumstances where the institution
transactions to another address or entity, FinCEN information collection, and reporting provides services for legitimate business that are
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assesses that there are few, if any, readily available not easily replicated or where a complete
ways for covered financial institutions to ‘‘reject’’
requirements on covered U.S. financial prohibition on transactional activity would
incoming CVC transactions [prior to receipt]. As institutions and/or the prohibition or otherwise unduly harm legitimate economic
such, a prohibition on the receipt of CVC from imposition of conditions upon the activity, Bitzlato provides a service that is easily
Bitzlato could not be feasibly implemented even by opening or maintaining of obtainable for legitimate customers through other
the most compliant of financial institutions and providers, and in this case the value of any
compliant institutions may find themselves in
correspondent or payable-through legitimate activity it may conduct is outweighed by
receipt of CVC from Bitzlato despite a desire and accounts for or on behalf of a foreign the significant proportion of illicit financial activity
effort to limit such exposure. banking institution; and (2) the identified and its lack of mandatory KYC.
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3926 Federal Register / Vol. 88, No. 14 / Monday, January 23, 2023 / Rules and Regulations
regulation or otherwise as permitted by acquiring its assets, in whole or in part, F. Penalties for Noncompliance
law,’’ and FinCEN considered both the and/or carrying out the affairs of The covered financial institution, and
order and regulation options. In light of Bitzlato under a new name. any of its officers, directors, employees,
the imminence of the threats posed by and agents, may be liable for civil or
8. Transmittal of Funds
the illicit actors facilitated by Bitzlato, criminal penalties under 31 U.S.C. 5321
as well as the extent of the illicit The order defines transmittal of funds and 5322 for violating any of the terms
transactional activity identified, an as the sending and receiving of funds, of this order.41
order prohibiting certain transmittals of including CVC.
funds is the most appropriate course of G. Validity of Order
action. 9. Meaning of Other Terms
Any judicial determination that any
In order to ensure orderly All terms used but not otherwise provision of this order is invalid shall
implementation, FinCEN will delay the defined herein shall have the meaning not affect the validity of any other
effective date of this order until set forth in 31 CFR Chapter X and 31 provision of this order, and each other
February 1, 2023. U.S.C. 5312. provision shall thereafter remain in full
A copy of this order will be published force and effect.
in the Federal Register. To the extent B. Prohibition of the Transmittal of
Funds Involving Bitzlato Dated: January 18, 2023.
Bitzlato or other parties have Himamauli Das,
information relevant to this order, they 1. Prohibition Acting Director, Financial Crimes
may submit it to FinCEN at frc@ Enforcement Network.
fincen.gov. A covered financial institution is
prohibited from engaging in a [FR Doc. 2023–01189 Filed 1–19–23; 11:15 am]
VIII. Order transmittal of funds from or to Bitzlato, BILLING CODE 4810–02–P
A. Definitions or from or to any account or CVC
address administered by or on behalf of
1. Bitzlato Bitzlato. DEPARTMENT OF HOMELAND
The order defines Bitzlato, a CVC SECURITY
2. Rejection of Funds and Condition on
exchanger registered in Hong Kong and the Transfer of Rejected Funds Coast Guard
previously known as ChangeBot, to
mean all subsidiaries, branches, and A covered financial institution will be
33 CFR Part 165
offices of Bitzlato operating in any deemed not to have violated this Order
jurisdiction, as well as any successor where, upon determining that it [Docket Number USCG–2023–0039]
entity. received CVC that originated from RIN 1625–AA00
Bitzlato or from an account or CVC
2. Convertible Virtual Currency (CVC)
address administered by or on behalf of Safety Zone; Charleston Harbor,
The order defines convertible virtual Bitzlato, that covered financial Charleston, SC
currency (CVC) as a medium of institution rejects the transaction,
exchange that either has an equivalent AGENCY: Coast Guard, DHS.
preventing the intended recipient from
value as currency, or acts as a substitute accessing such CVC and returning the ACTION: Temporary final rule.
for currency, but lacks legal tender CVC to Bitzlato, or to the account or SUMMARY: The Coast Guard is
status. Despite having legal tender status CVC address from which the CVC establishing a temporary safety zone for
in at least one jurisdiction, for the originated. navigable waters of the Cooper River,
purpose of this order, Bitcoin is
C. Order Period Charleston Harbor, and Atlantic Ocean
included as a type of CVC.
at the Charleston Harbor Entrance and
3. Covered Financial Institution The terms of this order are effective Approach, Charleston Harbor, within a
February 1, 2023, with no cessation 100-yard radius of the vessel USNS
The order defines a covered financial date.
institution as having the same meaning Gordon and all towing vessels
as ‘‘financial institution’’ in 31 CFR D. Reservation of Authority supporting its operations. The safety
zone is needed to protect personnel,
1010.100(t).
FinCEN reserves its authority vessels, and the marine environment
4. CVC Exchanger pursuant to Section 9714(a) to impose from potential hazards created by the
The order defines a CVC exchanger as conditions on certain transmittals of dead ship movement of USNS Gordon
any person engaged as a business in the funds from or to Bitzlato, or from or to from the Naval Weapons Station, Joint
exchange of CVC for fiat currency, any account or CVC address Base Charleston Transportation Core
funds, or other CVC. administered by or on behalf of Bitzlato. (TC) Dock or Wharf Alpha through the
Charleston Harbor Entrance Channel.
5. Peer to Peer (P2P) Exchangers E. Other Obligations
Entry of vessels or persons into this
The order defines P2P exchangers to Nothing in this order shall be zone is prohibited unless specifically
include persons engaged in the business construed to modify, impair or authorized by the Captain of the Port
of buying and selling CVC. otherwise affect any requirements or Sector Charleston.
obligations to which a covered financial
6. Recipient institution is subject pursuant to the 41 Section 6106(b) of the National Defense
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Authorization Act for Fiscal Year 2022 (Public Law
The order defines recipient as the BSA, including, but not limited to, the 117–81) amended section 9714 of the Combatting
person to be paid by the recipient’s filing of Suspicious Activity Reports Russian Money Laundering Act (Pub. L. 116–283)
covered financial institution. (SARs), or other applicable laws or to, among other things, provide that the penalties
regulations, such as the sanctions set forth in 31 U.S.C. 5321 and 5322 shall apply to
7. Successor Entity administered and enforced by the U.S. violations of any order, regulation, special measure,
or other requirement imposed under section 9714,
The order defines successor entity as Department of the Treasury’s Office of in the same manner and to the same extent
any person that replaces Bitzlato by Foreign Assets Control. described in sections 5321 and 5322.
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