On May 13, 2022, the US District Court for the District of Columbia, in a memorandum opinion, held that virtual currency (VC) is traceable and that the US Treasury Department's Office of Foreign Assets Control (OFAC) sanctions apply to traceable VC (In re: Criminal Complaint, No. 22-mj-067-ZMF (D.D.C. May 13, 2022)). In a first-of-its-kind decision, the court reinforced OFAC's position of on the application of sanctions to virtual currency. Defendant's name and the sanctioned country names were redacted from the opinion.

In the complaint, OFAC alleged that a US citizen used a US IP address to conspire to operate an online payment and remittance platform to conduct financial transactions based in an unidentified country subject to OFAC sanctions. OFAC is empowered to develop regulations against sanctioned regimes by the International Emergency Economic Powers Act (IEEPA), 50 U.S.C. § 170, (see Practice Note, OFAC Economic Sanctions: Cryptocurrency and Blockchain). The complaint alleged that defendant conspired to violate IEEPA and defraud the US in violation of 18 U.S.C. § 371.

The court adopted OFAC guidance on the issue of the applicability of sanctions regulations to VC. Citing Empresa Cubana Exportadora de Alimentos y Productos Varios, the court noted that a review of a decision made by OFAC is "extremely deferential" because OFAC operates in an arena that implicates national security, foreign policy, and administrative law (Empresa Cubana Exportadora deAlimentos y Productos Varios v. U.S. Dep’t of Treasury, 606 F. Supp. 2d 59, 68 (D.D.C. 2009), aff’d, 638 F.3d 794 (D.C. Cir. 2011)). The court then noted that:

See Legal Update, OFAC Issues Guidance and Updated FAQs on Virtual Currency Sanctions Compliance and FinCEN Issues Updated Advisory on Ransomware.

According to the court, defendant relied on perceived anonymity through its platform and completed financial transactions with a sanctioned entity, person, or jurisdiction using VC. The court found that: