Policy & Regulation

Bitcoin Addresses in This Week’s OFAC Announcement

What happened:

On Wednesday, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) announced action against two Iran-based individuals – Ali Khorashadizadeh and Mohammad Ghorbaniyan – and added them to its Specially Designated Nationals (SDN) list. For the first time, the list includes bitcoin addresses, which OFAC has linked to these individuals.

Why this matters:

Any dealings with these individuals carry civil and criminal penalties under the International Emergency Economic Powers Act. Organizations should understand their exposure to the two cryptocurrency addresses identified by OFAC. Any organizations with exposure to these addresses should seek legal counsel on their responses. OFAC has issued guidance here and here.

There are long-term implications as well. OFAC indicated in March that they would begin including cryptocurrency addresses on the SDN list, and we anticipate this is the first of many such instances. That means cryptocurrency businesses and financial institutions need to be prepared to react swiftly to OFAC designations moving forward, and reinforces the need for cryptocurrency compliance programs that can screen for high risk activity in real time.

Chainalysis insight:

Chainalysis has identified additional addresses associated with the two listed, and estimates that the combined addresses may have processed funds in excess of what has been reported. We anticipate further action by OFAC to include these additional addresses. Further, we have identified Bitcoin Cash transactions in addition to Bitcoin transactions associated with these addresses. Findings for both currencies were incorporated in our solutions within hours of OFAC’s announcement, and users can measure their exposure to these addresses in real-time.