Circle Reserves Over $10 Million to Settle SEC’s Case Against Poloniex

Circle also disclosed in a regulatory filing with the SEC that it is being investigated by the US Treasury Department’s Office of Foreign Assets Control (OFAC), which enforces US sanctions.

USDC stablecoin issuer, Circle, has set aside more than $10 million to settle a case against its discontinued cryptocurrency exchange Poloniex by the US Securities and Exchange Commission (SEC), according to a regulatory filing.

The Boston-based company sold Poloniex in 2019 after acquiring it just the previous year. On its sale, Circle recorded a realized loss of $156.8 million and said the disposal was to “divest from businesses related to speculative cryptocurrency trading” and to “better align” its business with the products it offers, according to a regulatory filing to the SEC earlier this month.

The agency filed a complaint against Poloniex back in Dec. 2017, at the height of the bull market, related to the trading of cryptos that may be characterized as securities. In March, the exchange offered to settle the case for $10.4 million.

In the filing, Circle further disclosed that it is being investigated by the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC), which enforces US sanctions.

Back in 2019, the company said it received administrative subpoenas from OFAC and an Iranian government agency, looking into possible violations related to registered exchange accounts for people in embargoed jurisdictions and for processing transactions that may have violated sanctions.

Circle expects to pay between $1.1 million to $2.8 million to settle these matters and has put away at least $1.1 million to do so, it said in the filing.

A few months back in May, Circle hired Mandeep Walia, who most recently served as compliance chief for Facebook-backed stablecoin Diem’s digital wallet, as its new chief compliance officer amidst the increased oversight.

Earlier this month, Circle announced that it would go public in a $4.5 billion SPAC merger. On Tuesday, it also published the breakdown of its reserves backing the stablecoin with 61% in cash and cash equivalents.

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