31 May 2024
In Re Bittrex Inc, the US Bankruptcy Court for the District of Delaware held that a cryptocurrency exchange was acting lawfully under US Iran sanctions when they froze a customer’s account because they were an Iranian resident.
In June 2017 Mr Ghader, an Iranian resident, opened an account with Bittrex INC, a US cryptocurrency exchange, and deposited over $1 million in cryptocurrency tokens.
Bittrex’s screening tool only verified that customers were not listed on the US SDN list but did not identify individuals resident in sanctioned jurisdictions (such as Iran).
After OFAC issued a subpoena to Bittrex in October 2017 directing it to provide OFAC with information regarding Bitttrex’s relationship with Iranian residents, Bittrex froze Mr Ghader’s account which remained frozen until July 2023 when Mr Ghader established that he resided in Turkey and was able to withdraw 99% of his assets which were worth $273,000 at the time of withdrawal.
Mr Ghader successfully recovered his remaining assets worth $4,000 but failed in his main claim in which he sought to recover a sum equivalent to the maximum value of the cryptocurrency in his account between October 2017 and July 2023 (which was over $10 million) – on the basis that he was prevented from withdrawing his assets when they were worth this much due to the freeze on his account. The court rejected this claim on the basis that the freezing of his account (and prevention of withdrawal) was authorised pursuant to US Iran sanctions.
