Crypto Company BitGo Hires Coinbase’s Former Compliance Chief

Mr. Horowitz will replace

Matthew Parrella,

who left BitGo at the end of last year, according to a company spokeswoman.

“Matt made significant contributions to BitGo, but ultimately decided to work with one of his old colleagues,” BitGo Chief Executive

Mike Belshe

said in a statement.

BitGo in August applied for a charter with the New York State Department of Financial Services that would allow it to operate as a custodian of cryptocurrencies under state banking law. The company competes with other custody providers such as Anchorage Trust Co. and with digital currency exchanges such as Coinbase, Gemini and Paxos, which have secured New York trust-company charters.

A New York charter would place BitGo under increased regulatory scrutiny. Regulators and law-enforcement officials have expressed concerns about the money laundering and legal compliance risks posed by digital assets.

BitGo last month was the subject of an enforcement action by the U.S. Treasury Department.

From 2015 to 2019, BitGo failed to prevent individuals apparently located in sanctioned countries from using its noncustodial digital wallet management service, despite tracking the internet protocol addresses of its users, according to the Treasury’s Office of Foreign Assets Control, which enforces U.S. sanctions.

The company agreed to pay $98,830 to resolve the alleged violations of U.S. sanctions, including those against Syria and Cuba.

Mr. Horowitz said in an interview that he would continue managing BitGo’s sanctions and anti-money-laundering programs, and would play a role in helping the company win approval for a charter from DFS.

BitGo is exploring potential licenses in other jurisdictions, both in the U.S. and abroad, Mr. Horowitz added. BitGo currently offers custodial services through a South Dakota-chartered trust company.

Before joining Coinbase, Mr. Horowitz spent more than 12 years with

Bank of New York Mellon Corp.

unit Pershing LLC, where he served in various roles, including as chief compliance officer.

“As we move into the new year, we will see greater regulatory clarity for digital assets both here and abroad,” Mr. Belshe said. “Jeff’s knowledge of both traditional financial services and crypto markets will be critically important as we navigate state, federal and international policies and regulations.”

Write to Dylan Tokar at dylan.tokar@wsj.com