In the first enforcement action against a virtual currency exchange, U.S. regulators have fined Ripple Labs and a subsidiary $700,000 for failing to comply with the Bank Secrecy Act.

Ripple Labs, which is bitcoin’s main competition in the cryptocurrency market, agreed to the fine as part of a settlement of civil charges brought by the Financial Crimes Enforcement Network. FinCEN alleges that Ripple sold its virtual currency, known as XRP, without registering as a money services business with FinCEN and failed to maintain anti-money laundering programs.

In a parallel case, the U.S. Attorney’s Office in San Francisco agreed not to criminally prosecute Ripple Labs in exchange for the firm acknowledging a list of violations and agreeing to pay a $450,000 forfeiture, which will be applied to the $700,000 fine.

According to prosecutors, Ripple Labs failed to file a suspicious activity report in 2013 when it negotiated a $250,000 transaction with an individual who had prior felony convictions for dealing in explosive devices.

“Federal laws that regulate the reporting of financial transactions are in place to detect and stop illegal activities, including those in the virtual currency arena,” Chief Richard Weber of the IRS’ Criminal Investigation Division said in a news release.

“Unregulated, virtual currency opens the door for criminals to anonymously conduct illegal activities online, eroding our financial systems and creating a Wild West environment where following the law is a choice rather than a requirement.”

Ripple Labs said in a statement that it had not “willfully engaged in criminal activity.”

“We couldn’t agree more with Chief Weber’s observation that a ‘Wild West environment’ is untenable in financial services,” the company stated. “To that end … Ripple Labs has … taken a number of important steps over the years to build and strengthen our compliance programs.”

A company spokeswoman told Forbes that Ripple Labs hired a chief compliance officer in January 2014, brought on a general counsel and a BSA officer in February 2015, and is working to enhance its anti-money laundering program.

“Ripple Labs is an industry leader. They simply paid a civil penalty for some technical violations, and they weren’t charged with any crime,” said Brian Klein, a criminal defense lawyer who represents companies dealing with cryptocurrency.

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