On Friday, U.S. District Judge Zia M. faruqui approved the Department of justice to initiate criminal proceedings against unnamed U.S. citizens, accusing him of sending bitcoins worth more than $10 million to countries subject to economic sanctions This is the first case in the judicial circle of the United States, and it is the first time that an accusation has been made in a sanctions case involving cryptocurrency.
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The U.S. Justice Department accused the U.S. citizen of transmitting bitcoin worth more than $10 million to virtual currency exchanges in several countries subject to comprehensive sanctions by the U.S. government, including Cuba, Iran, North Korea, Syria or Russia.
In the ruling, the judge said that the reputation of cryptocurrency for providing users with anonymity was just a "fairy tale". He added that although some legal experts believe that virtual currencies such as bitcoin, Ethereum or tether are not subject to U.S. sanctions laws because they are created and flowing outside the traditional financial system, the recent action taken by the office of foreign assets control of the Ministry of finance requires a different determination by the federal court.
Using the scattered expression of the late American political critic John McLaughlin and his long-time TV program "the McLaughlin group", faruqui wrote: "question 1: virtual currency is untraceable? Wrong... Question 2: sanctions do not apply to virtual currency? Wrong!"
Faruqui wrote in his opinion that he adopted the guidance issued by OFAC in October, which pointed out that the sanctions regulations also apply to transactions involving virtual currencies and transactions involving US dollars or other traditional legal tender.
The name of the defendant was not mentioned in the opinion, and the relevant case remained confidential. As often happens in the ongoing investigation, the information that would identify the subject or witness was withheld after the court consulted with the prosecutor.
Nevertheless, the prosecution represents a new criminal sanctions enforcement action against cryptocurrency transactions in the United States, at a time when there is growing concern that illegal actors can or are using this method to launder money or do business with countries where the United States has cut off the international financial lifeline of the dollar.