On March 31, 2023, the US Department of the Treasury's Office of Foreign Assets Control (OFAC) issued an enforcement release announcing the settlement of charges against California-state-based virtual currency (VC) exchange Uphold HQ Inc. and its affiliates (collectively, Uphold) for processing 152 transactions totaling $180,575.80 between March 2017 and May 2022 in apparent violation of US economic sanctions against Iran, Cuba, and Venezuela, including transactions for customers who self-identified as being located in Iran or Cuba and for employees of the Government of Venezuela (GoV).

According to the enforcement release, Uphold is a US-based global multi-asset digital trading platform where customers can move, convert, and hold traditional currency and VC or commodities to enable foreign exchange and cross-border remittances. OFAC reported that Uphold maintained accounts and processed transactions for customers who identified themselves at account onboarding as being located in either Iran or Cuba, or as GoV employees.

The apparent Venezuela sanctions violations arose under Executive Order 13884 (EO 13884), issued on August 5, 2019. According to the enforcement release, between August 9, 2019 and October 19, 2020, Uphold processed 58 transactions totaling $1,316.54 on behalf of two customers who self-identified in the course of enhanced customer diligence as employees of GoV-owned Petroleos de Venezuela S.A. in apparent violation of EO 13884 and the Venezuela Sanctions Regulations (31 C.F.R. § 591.201). In the fall of 2021, OFAC noted that Uphold began collecting enhanced customer diligence information but Uphold did not use this information to ensure compliance with EO 13884 until May 2022.

The enforcement release notes that OFAC's previously issued Frequently Asked Question (FAQ) 680 specifies that financial institutions are required to conduct due diligence on their own direct customers to confirm that those customers are not persons whose property and interests in property are blocked. According to the enforcement release, Uphold failed to comply with FAQ 680 as to employees of the GoV state-owned entities.

The apparent violations relating to Iran and Cuba arose between March 2017 and May 2022 when Uphold, or certain of its non-US affiliates, maintained accounts for customers who provided information during the account onboarding process indicating their location in Iran or Cuba. During that period, according to the enforcement release, Uphold processed 53 transactions totaling $22,870.02 for customers who self-identified as being located in Iran and 25 transactions totaling $142,683.74 for customers who self-identified as being located in Cuba. OFAC also noted that Uphold engaged in 16 transactions with an Iranian VC exchange totaling $13,705.50. The Uphold conduct resulted in 69 apparent violations of the Iranian Transactions and Sanctions Regulations (31 C.F.R. § 560) and 25 apparent violations of the Cuban Assets Control Regulations (31 C.F.R. § 515.201).

In calculating the Uphold penalty, OFAC noted that the statutory maximum civil monetary penalty applicable to Uphold's apparent violations was $44,468,494. OFAC also determined that the apparent violations were voluntarily self-disclosed and were non-egregious and under OFAC’s Economic Sanctions Enforcement Guidelines. The settlement amount of $72,230.32 reflects OFAC’s consideration of the aggregating and mitigating factors under the enforcement guidelines.