Criminal liability versus civil liability in the context of the growing application of cryptography – Fin Tech

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January 11, 2023

Wilmer Hale

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The emergence of digital assets has brought new risks and challenges, including the potential exploitation of technology to facilitate financial crime.

The U.S. Department of Justice is committed to working with its law enforcement and regulatory partners to “[advance] the responsible development of digital assets, the protection of the public from criminal actors in this ecosystem, and the resolution of the unique challenges posed by these technologies.”1

On the heels of Executive Order No. 14067 Responsible Development of Digital Assets,2 the DOJ released a series of new initiatives in furtherance of these efforts.3

Of note, on September 16, 2022, the DOJ announced the creation of the Digital Asset Coordinator, or DAC, Network, a network of more than 150 attorneys from the US law offices and litigation components of the DOJ who “will serve as the primary department’s forum for prosecutors to obtain and disseminate specialized training, technical expertise, and advice on the investigation and prosecution of digital asset crimes.”4

These additional resources and specialized training will likely result in more DOJ investigations, so crypto market participants should understand both how the DOJ’s tools differ from those of its regulatory partners, as well as the liability theories that the DOJ may pursue. alongside these partners in parallel actions.

As shown by the BitMEX case and other recent cases discussed below, crypto entities or individuals at the head of such entities can be sued on several legal theories and jurisdictional bases.

Click here to continue reading. . .

Originally published by Law360 on January 6, 2023.

Footnotes

1. Press release, Ministry of Justice, Off. of Pub. Foreign Affairs, Department of Justice Announces Report on Digital Assets and Launches National Network (September 16, 2022), https://www.justice.gov/opa/pr/justice-department-announces-report-digital- assets-and-launches -national network.

2. Executive Order on Ensuring Responsible Development of Digital Assets, White House (March 9, 2022), https://www.whitehouse.gov/briefing-room/presidential-actions/2022/03/09/executive- order -on-the-guarantee-of-responsible-development-of-digital-assets/.

3. Press release, Ministry of Justice, Off. of Pub. Foreign Affairs, Department of Justice Announces Report on Digital Assets and Launches National Network (September 16, 2022), https://www.justice.gov/opa/pr/justice-department-announces-report-digital- assets-and-launches -national network.

4. ID.

The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.

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