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The U.S. Department of the Treasury’s Office of Foreign Assets Control’s (OFAC) on September 21, 2021, for the first time issued sanctions against a virtual currency exchange, SUEX OTC, S.R.O. (SUEX), for its role in facilitating financial transactions for ransomware actors. The move by OFAC blocks SUEX’s property in the U.S. and makes SUEX and anyone engaging in transactions with SUEX potentially subject to sanctions. According to OFAC, SUEX has facilitated transactions involving illicit proceeds from at least eight ransomware variants, and over 40% of SUEX’s known transaction history is associated with illicit actors.
OFAC described its rationale for the new sanctions by emphasizing that virtual currency exchanges such as SUEX are critical to the profitability of ransomware attacks, which help fund additional cybercriminal activity. OFAC explained that whereas some virtual currency exchanges are merely exploited by malicious actors, others, like SUEX, facilitate illicit activities for their own illicit gains.
As a result of the new sanctions, all property of SUEX subject to U.S. jurisdiction are blocked, and U.S. persons are generally prohibited from engaging in transactions with SUEX. OFAC’s designation of SUEX is also a warning: financial institutions and other persons that engage in certain transactions or activities with SUEX may expose themselves to sanctions or be subject to an enforcement action.
Also on September 21, 2021, OFAC issued an updated Advisory on Potential Sanctions Risks for Facilitating Ransomware Payments, which emphasizes that the U.S. government continues to “strongly discourage the payment of cyber ransom or extortion demands” and recognizes the importance of “cyber hygiene” in preventing or mitigating such attacks. The updated Advisory highlights the importance of improving cybersecurity practices and reporting to, and cooperating with, appropriate U.S. government agencies in the event of a ransomware attack.
We will continue to monitor these developments and provide further advisories here. In the meantime, please contact Ben Dunlap at email@example.com or another attorney in our Data Security, Privacy & Technology practice group if you have further questions.