The US Treasury’s Office of Foreign Assets Control (OFAC) has officially sanctioned two bitcoin wallet addresses for the first time.
OFAC identified for the first time digital currency addresses associated with sanctioned persons. The newly sanctioned individuals, Iran-based Ali Khorashadizadeh and Mohammad Ghorbaniyan, were accused of converting digital currency payments into Iranian rial as part of a widespread ransomware scheme. Since 2015, the ransomware scheme (known as “SamSam”) has infected the data networks of corporations, hospitals, universities, and government agencies.
According to OFAC’s announcement, the identified bitcoin addresses were used with over 40 digital currency exchangers to process more than 7,000 illicit transactions in bitcoins worth millions of U.S. dollars.
Digital currency addresses
Digital currency addresses are alphanumeric identifiers that represent destinations for digital currency transfers. The addresses are held in digital currency wallets—software or hardware mechanisms that allow users to hold, store, and transfer digital currency. Because each transfer records a user’s digital currency address on the public blockchain ledger, transactions are described as pseudonymous rather than anonymous. OFAC’s action this week may raise questions about the privacy of bitcoin payments as opposed to other digital assets.
Similar to traditional identifiers like dates of birth, citizenship, and street addresses, the publication by OFAC of digital currency addresses associated with designated persons is intended to assist compliance officers with blocked accounts and prohibited transactions. Thus, while designated individuals may cease to use the listed addresses, financial institutions and digital exchanges can still use the information to help identify related or subsequent digital currency addresses.