The US Department of the Treasury’s Office of Foreign Assets Control (OFAC) blacklisted a Russia-based cryptocurrency exchange called SUEX for allegedly helping launder ransomware payments.

This is the first time the Treasury Department has sanctioned a crypto asset platform. At the same time, the department issued fresh warnings to the private sector that businesses run the risk of fines and penalties for paying ransoms.

Deputy Treasury Secretary Wally Adeyemo told reporters that the sanctions would be imposed on the Czech Republic registered crypto transferring service SUEX, which he said “facilitated transactions involving illicit proceeds for at least eight ransomware variants.”

Since its inception in 2018, SUEX has moved hundreds of millions of dollars in illicit digital coins, including over $160 million in Bitcoin, as per blockchain data analytics firm Chainalysis.

The updated advisory also noted that 40% of SUEX’s known transaction history was associated with illicit actors.

Cyberattacks have increased by 311% over 2019 to become a $350 million criminal industry in 2020, as per a task force established by the Institute for Security and Technology.

Adeyemo further said their new guidance “strongly discourages the payment of cyber ransoms or extortion demands.”

“Biden sanctions rogue Czech exchange for its role in processing ransomware proceeds. Targeting non-compliant exchanges is right way to deal with illicit use of cryptocurrency,” said Neeraj Agrawal of CoinCenter.

Blockchain intelligence company TRM Labs noted that SUEX operated as a “parasite” exchange, meaning it did not directly custody the crypto assets of its clients.

The US Treasury also knows that the majority of the exchanges are compliant, as Todd Cooklin, Counselor to the Deputy Secretary of the Treasury, told TRM Labs,

“We just can't allow the smaller nested exchanges to serve as backdoors for illicit activity. It clouds the entire ecosystem, which is predominantly conducting licit business.”

Adeyemo also talked about the same to the Wall Street Journal as he told the publication, “The majority of virtual currency exchanges are dealing in predominantly legal activity and have improved their compliance regimes over the last few years.”

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