Consent Order: In the Matter of Bittrex, Inc. (No. 2022-03)
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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.
UNITED STATES OF AMERICA
FINANCIAL CRIMES ENFORCEMENT NETWORK
DEPARTMENT OF THE TREASURY
IN THE MATTER OF: )
) Number 2022-03
Bittrex, Inc. )
)
CONSENT ORDER IMPOSING CIVIL MONEY PENALTY
The Financial Crimes Enforcement Network (FinCEN) has conducted a civil
enforcement investigation and determined that grounds exist to impose a Civil Money
Penalty against Bittrex, Inc. (Bittrex) for violations of the Bank Secrecy Act (BSA) and its
implementing regulations.1 Bittrex admits to the Statement of Facts and Violations set
forth below and consents to the issuance of this Consent Order.
I. JURISDICTION
Overall authority for enforcement and compliance with the BSA lies with the
Director of FinCEN, and the Director may impose civil penalties for violations of the
BSA and its implementing regulations.2 At all times relevant to this Consent Order,
Bittrex was a “domestic financial institution,” specifically, a “money services business”
(MSB) as defined by the BSA and its implementing regulations.3 As such, Bittrex was
required to comply with applicable BSA regulations.
1 The BSA is codified at 31 U.S.C. §§ 5311-5314, 5316-5336 and 12 U.S.C. §§ 1829b, 1951-1959.
Regulations implementing the BSA appear at 31 C.F.R. Chapter X.
2 31 U.S.C. § 5321(a); 31 C.F.R. §§ 1010.810(a), (d); Treasury Order 180-01 (July 1, 2014).
3 31 C.F.R. § 1010.100(ff) (defining “money services business”).
II. STATEMENT OF FACTS
The conduct described below took place from on or about February 13, 2014,
through on or about December 7, 2018 (Relevant Time Period), unless otherwise indicated.
A. Bittrex
Throughout the Relevant Time Period, Bittrex owned and operated a convertible
virtual currency (CVC) trading platform known as “Bittrex.” The platform was
primarily operated from offices located in Bellevue, Washington, and included a hosted
digital wallet service for storing and transferring CVCs. Bittrex also operated as an
“exchanger” of over 250 different CVCs,4 including bitcoin, ether, monero, zcash, and
dash.5 During the Relevant Time Period, Bittrex facilitated almost 546 million trades
on its platform in the United States and at times averaged over 20,000 transactions
(deposits and withdrawals) through its hosted wallets daily during the Relevant Time
Period, including transactions involving over $17 billion worth of bitcoin during the
Relevant Time Period.
B. Bank Secrecy Act Requirements
The term “money services business” is defined in 31 C.F.R. §1010.100(ff) as any of
the following categories of business: (1) dealers in foreign exchange; (2) check cashers;
(3) issuers or sellers of traveler’s checks or money orders; (4) providers of prepaid
access; (5) money transmitters; (6) U.S. Postal Service; or (7) sellers of prepaid access.6
The regulations define the term “money transmitter” as a person that either “provides
money transmission services” or who is otherwise “engaged in the transfer of funds.”7
4 See FIN-2013-G001, “Application of FinCEN’s Regulations to Persons Administering, Exchanging,
or Using Virtual Currencies,” March 18, 2013 (explaining that exchangers of CVC are money
transmitters under FinCEN’s regulations).
5 See 31 U.S.C. § 5312(a)(2)(R).
6 31 C.F.R. § 1010.100(ff). The definition also includes any “person wherever located doing
business, whether or not on a regular basis or as an organized or licensed business concern,
wholly or in substantial part within the United States, in one or more of the capacities listed
[above] . . . . This includes but is not limited to maintenance of any agent, agency, branch, or
office within the United States.”
7 31 C.F.R. § 1010.100(ff)(5).
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“Money transmission services” are defined in FinCEN’s regulations as “the acceptance
of currency, funds, or other value that substitutes for currency from one person and the
transmission of currency, funds, or other value that substitutes for currency to another
location or person by any means.”8 Given these definitions and Bittrex’s activities
within the United States, Bittrex was a “domestic financial institution,” specifically a
“money services business,” operating in the United States.9 As a result, Bittrex was
required to comply with FinCEN’s regulations applicable to MSBs during the Relevant
Time Period.
The BSA and its implementing regulations require an MSB, including a “money
transmitter” like Bittrex, to develop, implement, and maintain an effective Anti-Money
Laundering (AML) program that is reasonably designed to prevent the MSB from being
used to facilitate money laundering and the financing of terrorist activities.10
As of May 14, 2014, Bittrex was required to develop, implement and maintain
an effective, written AML program that, at a minimum: (a) incorporates policies,
procedures and internal controls reasonably designed to assure ongoing compliance
with the BSA and its implementing regulations; (b) designates an individual responsible
to assure day-to-day compliance with the MSB’s AML program and all BSA regulations;
(c) provides education and/or training for appropriate personnel, including training
in the detection of suspicious transactions; and (d) provides for independent review to
monitor and maintain an adequate program.11
8 31 C.F.R. § 1010.100(ff)(5).
9 See 31 U.S.C. § 5312(b)(1) (defining domestic financial institution); 31 C.F.R. §§ 1010.100(ff) (defining
“money services business”) and 1010.100(ff)(5) (defining “money transmitter”). FinCEN has issued
interpretive guidance explaining why CVC exchangers are money transmitters. See FIN-2013-G001,
“Application of FinCEN’s Regulations to Persons Administering, Exchanging, or Using Virtual
Currencies,” March 18, 2013; FIN-2019-G001, “Application of FinCEN’s Regulations to Certain
Business Models Involving Convertible Virtual Currencies,” May 9, 2019.
10 31 U.S.C. § 5318(h); 31 C.F.R. § 1022.210(a).
11 31 U.S.C. § 5318(h)(1); 31 C.F.R. § 1022.210(d) and (e) (“A [MSB] must develop and implement an
[AML] program that complies with the requirements of this section on or before…the end of the 90-
day period beginning on the day following the date the business is established.”).
–3–
C. Bittrex Failed to Develop, Implement and Maintain an Effective AML Program
Bittrex was aware of its obligations under the BSA and its implementing
regulations as an MSB, yet it failed to develop, implement, and maintain an effective
AML program during the Relevant Time Period. In particular, Bittrex was required
to develop and implement internal controls that were reasonably designed to assure
compliance with the BSA’s suspicious activity reporting requirements, but it failed
to do so. For example, in 2016, Bittrex averaged 11,000 transactions (deposits and
withdrawals) per day on its platform, with a daily value of approximately $1.54 million.
Instead of utilizing widely available transaction monitoring software tools to screen the
transactions for suspicious activity, the company relied on two employees with minimal
AML training and experience to manually review all of the transactions for suspicious
activity. These manual transaction monitoring responsibilities were in addition to
their other duties. Later in 2017, Bittrex’s transaction volume and values increased to
an average of 23,800 transactions per day with a daily value of approximately $97.9
million, yet the company continued to rely on the same two employees to manually
review all of its transactions for suspicious activity. The manual transaction monitoring
process utilized by Bittrex was demonstrably ineffective. Bittrex did not file a single
suspicious activity report (SAR) from its founding in 2014 through May 2017.
Bittrex did not take any steps to begin addressing its inadequate and ineffective
transaction monitoring process until April 2017 when the company hired additional
employees to help the two existing employees manually review thousands of transactions
per day for suspicious activity. The new and existing employees were overwhelmed
and the program remained highly ineffective throughout the Relevant Time Period. For
example, Bittrex filed only one SAR between May 2017 and November 2017.
FinCEN’s investigation revealed that Bittrex failed to detect suspicious
transactions through its platform, in addition to the thousands of transactions that
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were prohibited by the U.S. Department of the Treasury’s Office of Foreign Assets
Control (OFAC) as discussed below, during the Relevant Time Period. The suspicious
transactions involved various types of illicit activity, including direct transactions with
online darknet marketplaces such as AlphaBay, Agora, and the Silk Road 2. These
markets are used to buy and sell contraband such as stolen identification data, illegal
narcotics, and child pornography. The company also failed to detect, investigate and
report transactions connected to ransomware attacks against individuals and small
businesses in the United States during the relevant time period.
D. Internal Revenue Service Examination
In October 2017, the Internal Revenue Service (IRS) notified Bittrex that it
intended to examine the company for compliance with the BSA and its implementing
regulations.12 A month later, Bittrex filed 119 SARs with FinCEN. Bittrex also hired
additional compliance staff and began improving the development and implementation
of its AML policies, procedures, and internal controls in late 2017. For example, in
December 2017, Bittrex paused the opening of new customer accounts and used the
pause to begin improving its Know Your Customer procedures in compliance with the
BSA. Bittrex also hired its first qualified BSA officer in late 2017 to manage day-to-day
compliance with the BSA. Despite these improvements and investments, the company’s
AML program remained seriously under-resourced and it continued to manually
review tens of thousands of transactions per day for suspicious activity through
December 2018.
Bittrex’s failure to develop, implement, and maintain an effective AML program
from February 2014 until December 2018 left its platform open to abuse by bad actors,
including money launderers, terrorist financiers, and sanctions evaders.
12 Authority to examine MSBs to determine compliance with the BSA and its implementing regulations
is delegated to the IRS pursuant to 31 C.F.R. § 1010.810(b)(8).
–5–
E. OFAC-Prohibited Transactions
As described above, Bittrex was required to develop, implement, and maintain
an effective AML program that was reasonably designed to prevent the MSB from
being used to facilitate money laundering and the financing of terrorist activities. In
2015, and again in 2017, Bittrex adopted a written AML program that identified various
money laundering risks stemming from its operations as well as policies, procedures,
and controls that the company could use to mitigate those risks. One of the risks that
the company identified was geographic risk, including the risk that its platform would
be used to facilitate transactions subject to U.S. sanctions administered OFAC, as
well as high-risk and non-cooperative jurisdictions identified by the Financial Action
Task Force. In some cases, transactions that violate OFAC sanctions also constitute
suspicious activity that must be reported to FinCEN.13 From February 2014 through
February 2016, Bittrex knew that it was required to ensure that it did not process
transactions that violated OFAC sanctions, but the company failed to do so. In February
2016, Bittrex hired a third-party vendor to install and integrate software into its
platform that automatically screened transactions for compliance with OFAC sanctions.
However, the vendor’s software only screened transactions to identify potential matches
on the OFAC’s List of Specially Designated Nationals and Blocked Persons (the “SDN
List”) and other lists. The vendor’s software did not begin screening some customers or
transactions for a nexus to sanctioned jurisdictions until at least October 2017.
As a result, Bittrex conducted over 116,000 transactions, valued at over $260
million, with entities and individuals located in jurisdictions subject to comprehensive
OFAC sanctions during the Relevant Time Period, including transactions with entities
and individuals operating openly from OFAC-sanctioned jurisdictions such as Iran,
Cuba, Sudan, Syria, and the Crimea region of Ukraine. The transactions should
have been investigated, blocked and reported to OFAC, or rejected, and potentially
13 See 18 U.S.C. § 1956(a)(1)(A) (money laundering); 18 U.S.C. § 1956(a)(2)(A) (international money
laundering). See also infra note 18.
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reported to FinCEN. For example, Bittrex processed transactions with parties located in
sanctioned jurisdictions that were hundreds of times larger than typical transactions for
certain customers or for the customers on the platform as a whole, yet Bittrex took no
action whatsoever with regard to these atypical transactions.
F. Bittrex Lacked Proper Risk-Based Controls for Certain High Risk CVCs
Effective AML programs must be risk-based and reasonably designed to address
the nature and volume of the financial services provided by an MSB.14 During the
Relevant Time Period, Bittrex facilitated the purchase, trade, and sale of over 250
different CVCs on its platform. CVCs vary greatly and have different features that
increase or decrease transparency and traceability. Certain Anonymity-Enhanced
Cryptocurrencies (AECs) present unique money laundering risks and challenges
for MSBs and other financial institutions seeking to comply with the BSA and its
implementing regulations. Bittrex was aware of the risks and challenges presented by
the AECs that were exchanged on its platform, such as monero, zcash, pivx, and dash,
but the company failed to fully address the risks in practice or in the company’s written
AML compliance program. While Bittrex disabled privacy-enhancing features for most
of the AECs it transacted in, Bittrex did not implement any other controls to manage
the risks presented by AECs for which it was impossible to disable privacy-enhancing
features until after the Relevant Time Period. Bittrex also failed to implement
14 31 C.F.R. § 1022.210(b).
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appropriate policies, procedures, and internal controls to effectively mitigate the risks
associated with particularly challenging AECs, such as monero, until several years after
the Relevant Time Period.15
G. Bittrex Failed to File Suspicious Activity Reports
The BSA and its implementing regulations require MSBs to report transactions
that the MSB “knows, suspects, or has reason to suspect” are suspicious, if the
transactions are conducted or attempted by, at, or through the MSB, and the
transactions involve or aggregate to at least $2,000 in funds or other assets.16
A transaction is “suspicious” and requires the filing of a SAR if the MSB knows,
suspects, or has reason to suspect it: (a) involves funds derived from illegal activity;
(b) is designed to evade reporting requirements; (c) has no business or apparent lawful
purpose, and the MSB knows of no reasonable explanation for the transaction after
examining the available facts, including background and possible purpose; or (d)
involves use of the MSB to facilitate criminal activity.17
As discussed above, during the Relevant Time Period, Bittrex failed to develop
and implement policies, procedures, and internal controls that were reasonably
designed to assure compliance with its suspicious activity reporting obligations.
Despite Bittrex’s substantial increase in transaction volume and value in 2017, Bittrex
failed to develop or install widely available software tools to monitor its transactions for
indicia of suspicious activity until September 2018, relying instead on a few employees
with insufficient training to manually review thousands of transactions per day for
15 Monero’s protocol includes features that prevent tracking by using advanced programming to
purposefully insert false information into every transaction on its private blockchain. The false
information is impossible to separate from the valid payment details, effectively concealing sender
data and completely hiding all transaction amounts. The Monero network ultimately sends funds
to an auto-generated, one time use only, wallet known only to the transacting parties. It is designed
to make supervisory transaction monitoring virtually impossible. Moreover, wallet addresses on
monero’s private blockchain are selectively visible only when an observer has obtained a private
“view key.” See The Monero Project, Moneropedia: View Key (last visited Sept. 30, 2022),
https://www.getmonero.org/resources/moneropedia/viewkey.html.
16 31 U.S.C. § 5318(g)(1); 31 C.F.R. § 1022.320(a)(2).
17 31 U.S.C. § 5318(g)(1); 31 C.F.R. §§ 1022.320(a)(2)(i)-(iv).
–8–
suspicious activity. Bittrex’s inadequate procedures and controls, and its ineffective and
under-resourced transaction monitoring process, compromised its ability to identify,
enhance, integrate, and analyze available and relevant information, including traceable
CVC activity on public blockchains. This further undermined Bittrex’s ability to make
appropriate and timely determinations regarding the suspicious nature of transactions
and file SARs when appropriate.
As a result, Bittrex failed to file SARs on a significant number of transactions
involving sanctioned jurisdictions. Bittrex opened hundreds of accounts on behalf of
individuals located in jurisdictions subject to comprehensive OFAC sanctions programs
including Iran, Syria and the Crimea region of Ukraine. Through these accounts, some
individuals conducted transactions that were suspicious above and beyond the fact
that they involved a comprehensively sanctioned jurisdiction. For example, Bittrex
processed more than 200 transactions that involved $140,000 worth of CVC—nearly
100 times larger than the average withdrawal or deposit on the Bittrex platform—
and 22 transactions involving over $1 million worth of CVC each. Bittrex’s failure to
implement adequate procedures or controls led to its failure to identify and report these
transactions to FinCEN.18
18 In some cases, FinCEN will deem reports filed with OFAC as sufficient to satisfy the financial
institution’s SAR filing obligation. As FinCEN has explained in interpretive guidance, “reports
filed with [OFAC] of blocked transactions with Specially Designated Global Terrorists, Specially
Designated Terrorists, Foreign Terrorist Organizations, Specially Designated Narcotics Trafficker
Kingpins, and Specially Designated Narcotics Traffickers will be deemed by FinCEN to fulfill
the requirement to file [SARs] on such transactions for purposes of FinCEN’s suspicious activity
reporting rules.” FinCEN, Interpretive Release 2004-02—Unitary Filing of Suspicious Activity
and Blocking Reports, 69 Fed. Reg. 76,847, 76, 848 (Dec. 23, 2004). However, as FinCEN has also
explained, “this interpretation does not affect a financial institution’s obligation to identify and report
suspicious activity beyond the fact of the OFAC match. To the extent that the financial institution is
in possession of information not included on the blocking report filed with OFAC, a separate [SAR]
should be filed with FinCEN including that information. This interpretative guidance also does not
affect a financial institution’s obligation to file a [SAR], even if it has filed a blocking report with
OFAC, to the extent that the facts and circumstances surrounding the OFAC match are independently
suspicious—and are otherwise required to be reported under existing FinCEN regulations. In those
cases, the OFAC blocking report would not satisfy a financial institution’s [SAR] filing obligation.”
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III. VIOLATIONS
FinCEN has determined that Bittrex willfully violated the BSA and its
implementing regulations during the Relevant Time Period with regard to its
AML program and reporting of suspicious transactions.19 Specifically, FinCEN has
determined that Bittrex failed to develop, implement and maintain an effective AML
program that was reasonably designed to prevent its CVC trading platform and
hosted wallet service from being used to facilitate money laundering and the financing
of terrorist activities, in violation of 31 U.S.C. § 5318(h)(1) and 31 C.F.R. § 1022.210.
Additionally, FinCEN has determined that Bittrex failed to accurately, and timely,
report suspicious transactions to FinCEN, in violation of 31 C.F.R. § 1022.320.
IV. ENFORCEMENT FACTORS
FinCEN has considered all of the factors outlined in its Statement on
Enforcement of the Bank Secrecy Act issued August 18, 2020.20 The following factors
were particularly relevant to FinCEN’s evaluation of the appropriate disposition of this
matter, including the decision to impose a Civil Money Penalty and the size of that Civil
Money Penalty.
• Nature and seriousness of the violations, including extent of possible harm
to the public and systemic nature of the violations. Bittrex’s violations were
serious and exposed the public to a significant risk of possible harm. Bittrex’s
CVC platform was facilitating thousands of high-risk transactions, yet it failed to
implement appropriate policies, procedures, and internal controls to effectively
manage that risk. FinCEN’s investigation showed that Bittrex failed to detect,
19 In civil enforcement of the BSA under 31 U.S.C. § 5321(a)(1), to establish that a financial institution
acted willfully, the government need only show that the financial institution or individual acted
with either reckless disregard or willful blindness. The government need not show that the entity
or individual had knowledge that the conduct violated the BSA, or that the entity or individual
otherwise acted with an improper motive or bad purpose.
20 FinCEN, Statement on Enforcement of the Bank Secrecy Act (Aug. 18, 2020), https://www.fincen.gov/
sites/default/files/shared/FinCEN%20Enforcement%20Statement_FINAL%20508.pdf
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investigate, and report suspicious transactions, including transactions with
sanctioned jurisdictions and darknet marketplaces. Bittrex failed to hire and
train appropriate personnel to assure compliance with the BSA, and instead
relied on an ineffective manual transaction review process that could not keep
pace with the volume of transactions conducted through its platform. Moreover,
Bittrex operated for almost three years as an MSB before filing its first SAR in
May 2017, depriving law enforcement and others of critical financial intelligence
used to protect national security and safeguard the financial system from illicit
use. Further, because of its inadequate manual review process, the majority of
SARs filed by Bittrex were filed well after the transaction dates.
• Pervasiveness of wrongdoing within the financial institution. From the
beginning of Bittrex’s operations in February 2014 until late 2017, Bittrex
designated its Chief Executive Officer as the AML compliance officer responsible
for complying with Bittrex’s statutory and regulatory obligations under the
BSA. This appointment was not commensurate with Bittrex’s risk profile based
on the volume and scope of its activity. Bittrex failed to adopt a written AML
compliance program until August 2015, almost a year and half after it began
operations as an MSB. The written AML program, while thorough and rigorous
in many ways, did not adequately address Bittrex’s overall risk environment,
including the unique risks presented by some of the over 250 CVCs traded on its
platform. It also failed to adequately address the geographic risks posed by its
customer base, and the program was not fully implemented until December 2018.
Bittrex processed tens of thousands of transactions every day, yet the company’s
management failed to utilize an appropriate transaction monitoring process
resulting in the failure to file a significant number of SARs in a timely manner.
• History of similar violations or misconduct in general. Bittrex has not been the
subject of any prior criminal, civil, or regulatory enforcement action.
– 11 –
• Financial gain or other benefit resulting from the violations. Bittrex increased
revenue and grew its business without investing in appropriate resources,
tools, and personnel to develop, implement, and maintain an effective AML
compliance program. This gave the company an unfair competitive advantage in
the marketplace as compared to other companies offering similar products and
services that were investing in appropriate technology and personnel to comply
with the BSA. The financial benefit resulting from the violations was more
limited after Bittrex paused the opening of new customer accounts in December
2017 and began dedicating more resources to its compliance program.
• Presence or absence of prompt, effective action to terminate the violations
upon discovery, including self-initiated remedial measures. In late 2017, after
receiving notification of an upcoming federal compliance examination, but prior
to the issuance of the examination results, Bittrex began taking corrective actions
to address its compliance failures. In December 2017, Bittrex hired a qualified
AML compliance officer with significant BSA/AML experience. That same
month, Bittrex paused new customer registrations for four months and used the
pause to bolster its AML compliance program. To date, Bittrex has continued
to increase compliance staffing and training, and it continues to develop and
implement new policies and procedures, including the purchase and integration
of several automated transaction monitoring systems. The company has also
undergone independent audits by experienced auditing firms and significantly
increased and improved its SAR filing quality and timeliness. After the Relevant
Time Period, Bittrex compliance employees were required to take specialized
training, including event driven training corresponding to regulatory changes,
changes in technology, and/or the results of significant investigations. Bittrex
has updated its SAR evaluation and filing procedures. The company has also
contracted with a vendor to perform automated transaction monitoring for
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fiat currency transactions. Bittrex also added automated CVC transaction
monitoring and customer account surveillance capabilities. Bittrex also updated
its OFAC blocking, rejection, and reporting procedures. Bittrex has updated
its customer identification and verification processes, including a tool used
to verify the authenticity of government-issued identification documents,
among other enhancements. Additionally, Bittrex proactively works with U.S.
government agencies on ways to improve BSA/AML compliance by virtual asset
service providers. Due to the substantial investments and improvements to its
compliance program after the Relevant Time Period, FinCEN is not requiring
additional remedial measures as part of this Consent Order.
• Timely and voluntary disclosure of the violations to FinCEN. Bittrex did not
voluntarily disclose its compliance failures to FinCEN.
• Quality and extent of cooperation with FinCEN and other relevant agencies.
Bittrex has been responsive to requests for information from the IRS and FinCEN
throughout the course of the IRS’s examination and FinCEN’s investigation.
Bittrex agreed to waive any defense related to the statute of limitations for
conduct occurring during the Relevant Time Period. The company’s cooperation
and significant investment and efforts to design and build an effective AML
compliance program have led FinCEN to impose a significantly lower Civil
Money Penalty than it would have otherwise imposed for Bittrex’s serious and
systemic violations.
• Whether another agency took enforcement action for related activity. Following
a separate but parallel investigation by OFAC, Bittrex has agreed to pay
approximately $24 million to resolve OFAC’s investigation into apparent
violations of the Cuban Assets Control Regulations, 31 C.F.R. Part 515; the
Sudanese Sanctions Regulations, 31 C.F.R. Part 538; the Syrian Sanctions
– 13 –
Regulations, 31 C.F.R. Part 542; Iranian Transactions and Sanctions Regulations,
31 C.F.R. Part 560; and the Crimea region of Ukraine-related sanctions under
Executive Order 13685. FinCEN will credit payments made by Bittrex to resolve
OFAC’s enforcement investigation because FinCEN’s violations stem from some
of the same underlying conduct.
V. CIVIL PENALTY
FinCEN may impose a Civil Money Penalty of $25,000 per day for willful
violations of the requirement to implement and maintain an effective AML program
occurring on or before November 2, 2015, and $62,689 per day for violations occurring
after that date.21
For each willful violation of a SAR reporting requirement occurring on or before
November 2, 2015, FinCEN may impose a Civil Money Penalty not to exceed the greater
of the amount involved in the transaction (capped at $100,000) or $25,000.22 The per-
violation cap increases to $250,759, and the floor increases to $62,689, for violations
occurring after November 2, 2015.23
After considering all the facts and circumstances in this case, as well as the
enforcement factors discussed above, FinCEN has decided to impose a Civil Money
Penalty of $29,280,829.20 in this matter. As discussed above, FinCEN will credit the
$24,280,829.20 Bittrex has agreed to pay for the OFAC violations. Accordingly, Bittrex
shall make a payment of $5,000,000 to the U.S. Department of the Treasury pursuant
to payment instructions that will be transmitted to Bittrex upon execution of this
Consent Order.
21 31 U.S.C. § 5321(a)(1); 31 C.F.R. § 1010.821.
22 31 U.S.C. § 5321(a)(1).
23 31 C.F.R. § 1010.821.
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VI. CONSENT AND ADMISSIONS
To resolve this matter and only for that purpose, Bittrex admits to the Statement
of Facts and Violations set forth in this Consent Order and admits to willfully violating
the BSA and its implementing regulations. Bittrex consents to the use of the Statement
of Facts, and any other findings, determinations, and conclusions of law set forth in this
Consent Order in any other proceeding brought by or on behalf of FinCEN, or to which
FinCEN is a party or claimant, and agrees they shall be taken as true and correct and be
given preclusive effect without any further proof. Bittrex understands and agrees that in
any administrative or judicial proceeding brought by or on behalf of FinCEN against it,
including any proceeding to enforce the Civil Money Penalty imposed by this Consent
Order or for any equitable remedies under the BSA, Bittrex shall be precluded from
disputing any fact or contesting any determinations set forth in this Consent Order.
To resolve this matter, Bittrex agrees to and consents to the issuance of this
Consent Order and all terms herein and agrees to make a payment of $5,000,000 to
the U.S. Department of the Treasury pursuant to the payment instructions that will
be transmitted to Bittrex upon execution of this Consent Order. If timely payment is
not made, Bittrex agrees that interest, penalties, and administrative costs will accrue.24
If Bittrex fails to pay the $24,280,829.20 settlement arising out of its apparent OFAC
violations, it must pay the entire $ $29,280,829.20 penalty imposed by this Consent
Order within thirty days of default.
Bittrex understands and agrees that it must treat the Civil Money Penalty
paid under this Consent Order as a penalty paid to the government and may not
claim, assert, or apply for a tax deduction, tax credit, or any other tax benefit for any
payments made to satisfy the Civil Money Penalty. Bittrex understands and agrees
that any acceptance by or on behalf of FinCEN of any partial payment of the Civil
Money Penalty obligation will not be deemed a waiver of Bittrex’s obligation to make
24 31 U.S.C. § 3717; 31 C.F.R. § 901.9.
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further payments pursuant to this Consent Order, or a waiver of FinCEN’s right to seek
to compel payment of any amount assessed under the terms of this Consent Order,
including any applicable interest, penalties, or other administrative costs.
Bittrex affirms that it agrees to and approves this Consent Order and all terms
herein freely and voluntarily and that no offers, promises, or inducements of any nature
whatsoever have been made by FinCEN or any employee, agent, or representative of
FinCEN to induce Bittrex to agree to or approve this Consent Order, except as specified
in this Consent Order.
Bittrex understands and agrees that this Consent Order implements and
embodies the entire agreement between Bittrex and FinCEN, and its terms relate only
to this enforcement matter and any related proceeding and the facts and determinations
contained herein. Bittrex further understands and agrees that there are no express or
implied promises, representations, or agreements between Bittrex and FinCEN other
than those expressly set forth or referred to in this Consent Order and that nothing in
this Consent Order is binding on any other law enforcement or regulatory agency or
any other governmental authority, whether foreign, Federal, State, or local.
Bittrex understands and agrees that nothing in this Consent Order may be
construed as allowing Bittrex, its subsidiaries, affiliates, Board, officers, employees, or
agents to violate any law, rule, or regulation.
Bittrex consents to the continued jurisdiction of the courts of the United States
over it and waives any defense based on lack of personal jurisdiction or improper venue
in any action to enforce the terms and conditions of this Consent Order or for any other
purpose relevant to this enforcement action. Solely in connection with an action filed by
or on behalf of FinCEN to enforce this Consent Order or for any other purpose relevant
to this action, Bittrex authorizes and agrees to accept all service of process and filings
through the Notification procedures below and to waive formal service of process.
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VII. COOPERATION
Bittrex shall fully cooperate with FinCEN in any and all matters within the scope
of or related to the Statement of Facts, including any investigation of its current or
former directors, officers, employees, agents, consultants, or any other party. Bittrex
understands that its cooperation pursuant to this paragraph shall include, but is not
limited to, truthfully disclosing all factual information with respect to its activities, and
those of its present and former directors, officers, employees, agents, and consultants.
This obligation includes providing to FinCEN, upon request, any document, record
or other tangible evidence about which FinCEN may inquire of Bittrex. Bittrex’s
cooperation pursuant to this paragraph is subject to applicable laws and regulations,
as well as valid and properly documented claims of attorney-client privilege or the
attorney work product doctrine.
VIII. RELEASE
Execution of this Consent Order and compliance with all of the terms of this
Consent Order, settles all claims that FinCEN may have against Bittrex for the conduct
described in this Consent Order during the Relevant Time Period. Execution of
this Consent Order, and compliance with the terms of this Consent Order, does not
release any claim that FinCEN may have for conduct by Bittrex other than the conduct
described in this Consent Order during the Relevant Time Period, or any claim that
FinCEN may have against any current or former director, officer, owner, or employee
of Bittrex, or any other individual or entity other than those named in this Consent
Order. In addition, this Consent Order does not release any claim or provide any other
protection in any investigation, enforcement action, penalty assessment, or injunction
relating to any conduct that occurs after the Relevant Time Period as described in this
Consent Order.
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IX. WAIVERS
Nothing in this Consent Order shall preclude any proceedings brought by, or on
behalf of, FinCEN to enforce the terms of this Consent Order, nor shall it constitute a
waiver of any right, power, or authority of any other representative of the United States
or agencies thereof, including but not limited to the Department of Justice.
In consenting to and approving this Consent Order, Bittrex stipulates to the
terms of this Consent Order and waives:
A. Any and all defenses to this Consent Order, the Civil Money Penalty imposed
by this Consent Order, and any action taken by or on behalf of FinCEN that
can be waived, including any statute of limitations or other defense based on
the passage of time;
B. Any and all claims that FinCEN lacks jurisdiction over all matters set forth
in this Consent Order, lacks the authority to issue this Consent Order or to
impose the Civil Money Penalty, or lacks authority for any other action or
proceeding related to the matters set forth in this Consent Order;
C. Any and all claims that this Consent Order, any term of this Consent Order,
the Civil Money Penalty, or compliance with this Consent Order, or the Civil
Money Penalty, is in any way unlawful or violates the Constitution of the
United States of America or any provision thereof;
D. Any and all rights to judicial review, appeal or reconsideration, or to seek
in any way to contest the validity of this Consent Order, any term of this
Consent Order, or the Civil Money Penalty arising from this Consent Order;
E. Any and all claims that this Consent Order does not have full force and effect,
or cannot be enforced in any proceeding, due to changed circumstances,
including any change in law;
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F. Any and all claims for fees, costs, or expenses related in any way to this
enforcement matter, Consent Order, or any related administrative action,
whether arising under common law or under the terms of any statute,
including, but not limited to, under the Equal Access to Justice Act. Bittrex
agrees to bear its own costs and attorneys’ fees.
X. VIOLATIONS OF THIS CONSENT ORDER
Determination of whether Bittrex has failed to comply with this Consent Order,
or any portion thereof, and whether to pursue any further action or relief against Bittrex
shall be in FinCEN’s sole discretion. If FinCEN determines, in its sole discretion, that a
failure to comply with this Consent Order, or any portion thereof, has occurred, or that
Bittrex has made any misrepresentations to FinCEN or any other government agency
related to the underlying enforcement matter, FinCEN may void any and all releases
or waivers contained in this Consent Order; reinstitute administrative proceedings;
take any additional action that it deems appropriate; and pursue any and all violations,
maximum penalties, injunctive relief, or other relief that FinCEN deems appropriate.
FinCEN may take any such action even if it did not take such action against Bittrex
in this Consent Order and notwithstanding the releases and waivers herein. In the
event FinCEN takes such action under this paragraph, Bittrex specifically agrees to toll
any applicable statute of limitations and to waive any defenses based on a statute of
limitations or the passage of time that may be applicable to the Statement of Facts in this
Consent Order, until a date 180 days following Bittrex’s receipt of notice of FinCEN’s
determination that a misrepresentation or breach of this agreement has occurred, except
as to claims already time barred as of the Effective Date of this Consent Order.
In the event that FinCEN determines that Bittrex has made a misrepresentation
or failed to comply with this Consent Order, or any portion thereof, all statements
made by or on behalf of Bittrex to FinCEN, including the Statement of Facts, whether
prior or subsequent to this Consent Order, will be admissible in evidence in any and
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all proceedings brought by or on behalf of FinCEN. Bittrex agrees that it will not assert
any claim under the Constitution of the United States of America, Rule 408 of the
Federal Rules of Evidence, or any other law or federal rule that any such statements
should be suppressed or are otherwise inadmissible. Such statements shall be treated
as binding admissions, and Bittrex agrees that it shall be precluded from disputing or
contesting any such statements. FinCEN shall have sole discretion over the decision to
impute conduct or statements of any director, officer, employee, agent, or any person or
entity acting on behalf of, or at the direction of Bittrex in determining whether Bittrex
has violated any provision of this Consent Order.
XI. PUBLIC STATEMENTS
Bittrex agrees that it shall not, nor shall its attorneys, agents, partners, directors,
officers, employees, affiliates, or any other person authorized to speak on its behalf or
within its authority or control, take any action or make any public statement, directly or
indirectly, contradicting its admissions and acceptance of responsibility or any terms of
this Consent Order, including any fact finding or determination in this Consent Order.
FinCEN shall have sole discretion to determine whether any action or
statement made by Bittrex, or by any person under the authority, control, or
speaking on behalf of Bittrex contradicts this Consent Order, and whether Bittrex has
repudiated such statement.
XII. RECORD RETENTION
In addition to any other record retention required under applicable law, Bittrex
agrees to retain all documents and records required to be prepared or recorded under
this Consent Order or otherwise necessary to demonstrate full compliance with each
provision of this Consent Order, including supporting data and documentation. Bittrex
agrees to retain these records for a period of 6 years after creation of the record, unless
required to retain them for a longer period of time under applicable law.
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XIII. SEVERABILITY
Bittrex agrees that if a court of competent jurisdiction considers any of the
provisions of this Consent Order unenforceable, such unenforceability does not render
the entire Consent Order unenforceable. Rather, the entire Consent Order will be
construed as if not containing the particular unenforceable provision(s), and the rights
and obligations of FinCEN and Bittrex shall be construed and enforced accordingly.
XIV. SUCCESSORS AND ASSIGNS
Bittrex agrees that the provisions of this Consent Order are binding on its
owners, officers, employees, agents, representatives, affiliates, successors, assigns, and
transferees to whom Bittrex agrees to provide a copy of the executed Consent Order.
Should Bittrex seek to sell, merge, transfer, or assign its operations, or any portion
thereof, that are the subject of this Consent Order, Bittrex must, as a condition of sale,
merger, transfer, or assignment obtain the written agreement of the buyer, merging
entity, transferee, or assignee to comply with this Consent Order.
XV. MODIFICATIONS AND HEADINGS
This Consent Order can only be modified with the express written consent
of FinCEN and Bittrex. The headings in this Consent Order are inserted for convenience
only and are not intended to affect the meaning or interpretation of this Consent Order
or its individual terms.
XVI. AUTHORIZED REPRESENTATIVE
Bittrex’s representative, by consenting to and approving this Consent
Order, hereby represents and warrants that the representative has full power and
authority to consent to and approve this Consent Order for and on behalf of Bittrex,
and further represents and warrants that Bittrex agrees to be bound by the terms
and conditions of this Consent Order.
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XVII. NOTIFICATION
Unless otherwise specified herein, whenever notifications, submissions, or
communications are required by this Consent Order, they shall be made in writing and
sent via first-class mail and simultaneous email, addressed as follows:
To FinCEN: Associate Director, Enforcement and Compliance Division,
Financial Crimes Enforcement Network
P.O. Box 39
Vienna, Virginia 22183
To Bittrex: Head of Litigation and Regulatory Affairs
Bittrex, Inc.
701 5th Avenue, Suite 4200
Seattle, WA 98104-3100
Notices submitted pursuant to this paragraph will be deemed effective
upon receipt unless otherwise provided in this Consent Order or approved by FinCEN
in writing.
XVIII. COUNTERPARTS
This Consent Order may be signed in counterpart and electronically.
Each counterpart, when executed and delivered, shall be an original, and all of the
counterparts together shall constitute one and the same fully executed instrument.
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XIX. EFFECTIVE DATE AND CALCULATION OF TIME
This Consent Order shall be effective upon the date signed by FinCEN.
Calculation of deadlines and other time limitations set forth herein shall run from
the effective date (excluding the effective date in the calculation) and be based on
calendar days, unless otherwise noted, including intermediate Saturdays, Sundays,
and legal holidays.
By Order of the Director of the Financial Crimes Enforcement Network.
/s/
Himamauli Das Date:
Acting Director
Consented to and Approved By:
/s/
Richie Lai Date:
Chief Executive Officer
Bittrex, Inc.
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