{"id":101386,"date":"2019-04-11T00:22:26","date_gmt":"2019-04-11T07:22:26","guid":{"rendered":"https:\/\/cryptoslate.com\/?p=101386"},"modified":"2020-03-24T07:01:24","modified_gmt":"2020-03-24T07:01:24","slug":"bittrex-fails-to-obtain-bitlicense-new-york-regulators-cite-poor-internal-controls","status":"publish","type":"post","link":"https:\/\/cryptoslate.com\/bittrex-fails-to-obtain-bitlicense-new-york-regulators-cite-poor-internal-controls\/","title":{"rendered":"Bittrex fails to obtain BitLicense, New York regulators cite poor internal controls"},"content":{"rendered":"

US cryptocurrency exchange <\/span>Bittrex<\/span><\/a> had its BitLicense application rejected by the New York Department of Financial Services (NYDFS) after years of scrutiny. The agency rejected the application because of alleged deficiencies in anti-money laundering practices alongside poor due diligence over token launches, among other shortcomings.<\/span><\/p>\n

Explaining the reasons behind the decision in a <\/span>public notice<\/span><\/a> published on Apr. 10th, NYDFS stated that the exchange did not do enough to address several know-your-customer (KYC) and anti-money laundering (AML) deficiencies.<\/span><\/p>\n

Deficiencies in Compliance<\/span><\/h2>\n

According to NYDFS, Bittrex failed to demonstrate compliance with the state\u2019s financial regulations and lack of a consistent set of criteria for making token listing decisions. The agency claimed that it had issued Bittrex with \u201cseveral deficiency letters\u201d from the start of the multi-year application.<\/span><\/p>\n

Bittrex was said to have repeatedly violated standards set by the Office of Foreign Assets Control (OFAC) regarding sanctioned territories, such as Iran. NYDFS says that it has evidence that Bittrex repeatedly processed transactions involving individuals from sanctioned territories. This problem was allegedly further compounded by a lack of adequate staff training. An excerpt from the rejection notice reads:<\/span><\/p>\n

\u201cThe severity of the deficiencies in Bittrex\u2019s BSA\/AML\/OFAC compliance program is indicative of a lack of a comprehensive training program. The Department\u2019s concern regarding the lack of training is compounded as recent hires within the compliance team do not have the requisite BSA\/AML\/OFAC knowledge or expertise.\u201d<\/span><\/p><\/blockquote>\n

The NYDFS also accused Bittrex of \u201clacking adequate due diligence in launching tokens or products.\u201d The statement revealed that some coins were listed despite not having the necessary paperwork, which is at odds with the exchange\u2019s own listing policy. In at least one case, the agency found that a token was listed on Bittrex without having a listing application on file. Because of these shortcomings, the regulator asserted:<\/span><\/p>\n

\u201c[Bittrex] has failed to demonstrate responsibility, financial and business experience, or the character and fitness to warrant the belief that its business will be conducted fairly, equitably and carefully\u2026.\u201d<\/span><\/p><\/blockquote>\n

Bittrex Responds to NYDFS Rejection<\/span><\/h2>\n

Bittrex <\/span>responded<\/span><\/a> that it was \u201csaddened and disappointed\u201d by the rejection, which is the first such action by NYDFS in over two years. According to the exchange, despite the NYDFS raising multiple concerns about compliance and due diligence, those shortcomings had been worked on and fixed.<\/span><\/p>\n

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Statement on the New York Department of Financial Services (NYDFS) Decision. Learn more: https:\/\/t.co\/BZzwCOWqOd<\/a> pic.twitter.com\/Fths61aiI7<\/a><\/p>\n

— Bittrex (@BittrexExchange) April 10, 2019<\/a><\/p><\/blockquote>\n