U.S. Treasury Sanctions Bitcoin Wallets For First Time

By Michael Kern, a newswriter and editor at Safehaven.com, Oilprice.com, and a writer at Crypto Insider. Originally published at CryptoInsider

Last week, the U.S. Treasury Department of Foreign Assets Control (OFAC) targeted two bitcoin addresses, announcing that the wallets associated Iranian citizens Ali Khorashadizadeh and Mohammad Ghorbaniyan had been added to the Specially Designated Nationals sanctions list.

The sanctions, which are the first of their kind, are part of a wider move to track and restrict movements in the digital space involving money laundering and cybercrime.

Additionally, the OFAC noted that the agency would be looking into exchanges who facilitated transactions by these individuals, stating “We are publishing digital currency addresses to identify illicit actors operating in the digital currency space. Treasury will aggressively pursue Iran and other rogue regimes attempting to exploit digital currencies and weaknesses in cyber and AML/CFT safeguards to further their nefarious objectives.”

The cause for the sanctions, according to the OFAC, was that Khorashadizadeh and Ghorbaniyan were involved in malicious SamSam ransomware attacks.

In addition to the sanctions placed on Khorashadizadeh and Ghorbaniyan, it is noted that two others, Faramarz Shahi Savandi, and Mohammad Mehdi Shah Mansouri had been officially charged with one count of conspiracy to commit wire fraud, one count of conspiracy to commit fraud related to computers, and other counts accusing them of intentionally damaging protected computers and illegally transmitting demands related to protected computers.

The SamSam ransomeware has impacted over 200 victims to date, including hospitals, corporations, universities and government facilities.

In an interview with CoinDesk Ghorbaniyan explained, “I didn’t know the SamSam criminal activities were associated with the bitcoins I received from these two customers and I’m honestly still not sure if these two people are behind the SamSam crimes.” Adding, “I do a standard know-your-customer (KYC) procedure. And there’s no reason to be suspicious of my customers once they do KYC.”

Sanctions Set a New Precedent

Though Khorashadizadeh and Ghorbaniyan were targeted for potential involvement in criminal activities, the U.S. Treasury Department’s move sets a new precedent in the crypto-sphere.

With Iran currently reeling from wider economic sanctions from the U.S., and bitcoin usage on the rise in the Middle-Eastern country, it is possible that these actions could be the first of many. And the consequences for exchanges caught in the crossfire could be severe.

“As Iran becomes increasingly isolated and desperate for access to U.S. dollars, it is vital that virtual currency exchanges, peer-to-peer exchangers, and other providers of digital currency services harden their networks against these illicit schemes,” explained Sigal Mandelker, Treasury Under Secretary for Terrorism and Financial Intelligence.

U.S. Department of Homeland Security Takes Aim at Privacy Coins

In addition to the push to crack down on illicit bitcoin transactions, authorities are also looking at ways to reign in privacy coins such as Monero and Zcash, according to a new PreSolicitation.

“A key feature underlying these newer blockchain platforms that is frequently emphasized is the capability for anonymity and privacy protection. While these features are desirable, there is similarly a compelling interest in tracing and understanding transactions and actions on the blockchain of an illegal nature,” the PreSolicitation states.

The notice suggests that the U.S. Department of Homeland Security is considering the development of a forensics tool which will allow the agency to monitor, track and identify users of a number of privacy coins, much like Chainalysis has done with the Bitcoin blockchain.

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    1. John Zelnicker

      December 5, 2018 at 12:41 am

      Lol, exactly.

      And, as Yves has said many times, prosecution futures. Looks like some of those options have reached their expiration date out-of-the-money.

  1. John Beech

    Looks like the long arm of the law is serious. Of course we don’t care because they’ve merely come for our neighbors. Thing is, one day we wake up and they’ve come for us!

    1. False Solace

      Yeah, it’s certainly a slippery slope from Iranian ransomware scammers to the average Joe Shmoe American. To be sure the indictment hasn’t been tried in court yet.

      First they came for the Bitcoin scammers…

  2. p FitzSmon

    Why do they call Bitcoin the first digital currency when 95% of money is already bank created and maneuvered through a keyboard.

  3. Duffel Bag

    Like Warren Buffet said, you’d be better served to stand on the end of a dock and tear up hundred dollar bills and toss em in the water. At least that currency would float. Can you spell PONZI ?

  4. DHG

    Sanctions all over the world for A to Z and we wonder why the world hates us. Other nations are working on smacking down the dollar and the US financial system.

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