Cryptocurrency exchange Coinbase Global Inc. said its services may have been used by individuals, entities or jurisdictions subject to U.S. sanctions regulations and has disclosed the activity to a federal agency.
The largest U.S.-based cryptocurrency exchange, which on Thursday filed to go public with the Securities and Exchange Commission, in a regulatory filing said it has submitted disclosures to or responded to administrative subpoenas from the U.S. Treasury Department’s Office of Foreign Assets Control, or OFAC, which enforces U.S. sanctions.
The company in its prospectus, filed to the SEC last week, said it hasn’t faced monetary penalties or other enforcement actions related to the disclosures or subpoenas, but that some of its disclosures are still under review by OFAC.
U.S. regulations prohibit transactions with blacklisted individuals or companies and with governments or jurisdictions subject to comprehensive U.S. sanctions.
The nature of blockchain technology and Coinbase’s services make it “technically infeasible” to prevent transactions with certain individuals or companies or addresses, the company said.
A spokesman for Coinbase declined to comment. A spokeswoman for the Treasury didn’t immediately provide a comment.
“We have shared key particulars of our compliance program with OFAC and we believe we have a reasonable risk-based program in place,” the company said in the prospectus.
The company’s compliance program includes monitoring of internet protocol addresses to identify prohibited jurisdictions under U.S. sanctions and blockchain addresses that have been blacklisted by OFAC or believed by the company to be associated with blacklisted individuals, companies or jurisdictions, according to the filing.
Coinbase, which has about 43 million users and is accessible in more than 100 countries, in its prospectus said it is implementing additional controls and screening tools. The company named a new compliance chief last month.
Write to Mengqi Sun at mengqi.sun@wsj.com
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