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The U.S. Department of Justice (DOJ) announced a settlement with Aux Cayes FinTech Co. Ltd., an affiliate of cryptocurrency exchange OKX.
The company has agreed to pay over $500 million, which includes $84 million in penalties and approximately $421 million in forfeited fees earned from U.S. customers. The settlement resolves the issue of the company operating as an unlicensed money transmitter.
The DOJ’s investigation highlighted that OKX did not obtain the necessary license to conduct its money transmission business within the United States. OKX acknowledged that the U.S. customers in question are no longer using the platform and emphasized that there were no allegations of customer harm in this case.
In addition to the financial penalties, OKX has agreed to forfeit the fees accumulated from U.S. customers, totaling about $421 million. The company has taken proactive measures to address the compliance gaps by hiring a compliance consultant to improve their overall program and intends to continue working with the consultant moving forward.
FBI Assistant Director in Charge James E. Dennehy criticized OKX for blatantly violating U.S. laws and encouraging customers to provide false information to bypass regulatory procedures. Dennehy also noted that the failure to comply with U.S. regulations allowed for significant illicit transactions to go undetected on the OKX platform.
Despite OKX’s policy since 2017 to block U.S. residents from transacting on its exchange, the DOJ found that the firm actively pursued American customers. The DOJ revealed that OKX employees advised customers to provide false information to circumvent know-your-customer (KYC) checks, even suggesting that they could falsely claim to be from another country.
The DOJ also pointed out that OKX engaged in advertising within the U.S. and sponsored events like the Tribeca Film Festival, where the exchange was promoted. The DOJ cited an instance where a customer created an instructional video on how U.S. residents could register with OKX using a VPN to conceal their location.
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