Crypto Players Face Increased Enforcement Boosted by DOJ Network

[ad_1]

Adding to the turmoil in the cryptocurrency industry over the past year, the Department of Justice has more actively pushed criminal law enforcement actions around cryptocurrency and other digital assets.

For observers of regulatory activity in this space, the DOJ’s priorities come as no surprise. Announcements made last year by the White House and the DOJ indicate that resources for the enforcement of digital assets will only increase, and with them, more firepower of prosecutions targeting bad behavior in the industry. of cryptocurrency.

DOJ and White House enforcement priorities increase risk for financial institutions involved in the transmission of digital assets, prompting internal departments to stay ahead of the compliance march.

Coordination of digital assets

On September 16, 2022, the DOJ announced a new National Network of Federal Prosecutor Digital Asset Coordinators as part of its response to President Joes Bidens’ Executive Order of March 2022.

This network will include more than 150 federal prosecutors in US prosecutors’ offices nationwide and in various DOJ offices in Washington, DC. These experts will develop best practices for investigating and prosecuting suspected crimes related to digital assets.

In the world of blockchain, where new tokens, coins, and other digital assets are created and traded every day, the DOJ believes that commissioning more prosecution resources for the development of expertise in the field will help it to better identify and stop cybercriminals. Similar networks of prosecutors have been successfully deployed in areas such as intellectual property infringement and counter-terrorism.

The network will work with the DOJ’s National Cryptocurrency Enforcement Team, established in late 2021, to bolster prosecution resources and develop expertise in the investigation and prosecution of cryptocurrency crimes.

Strategic Priorities

In addition to this initiative, the DOJ has proposed three regulatory and legislative priorities to combat cryptocurrency crime.

The first priority is to amend the anti-whistleblower law for financial institutions to include digital assets, which would make it a crime for directors or officers of financial institutions to notify customers when their records are wanted. by law enforcement. By including digital assets in the anti-whistleblower law, enforcement officials are making it harder for customers to evade detection, earning another arrow in their investigative quiver.

The second priority is to strengthen penalties and broaden enforcement of criminal laws governing the operation of an unlicensed money transfer business. This proposal would give the DOJ and other federal law enforcement agencies more power to regulate and prosecute digital asset exchanges and other financial institutions involved in the transmission of cryptocurrency.

The DOJ’s third priority is to increase the statute of limitations to 10 years for all crimes involving the transfer of digital assets. This will allow the DOJ to methodically investigate complex crypto-crime allegations.

Coupled with the establishment of the DAC Network, these priority proposals bolster the DOJ’s arsenal to investigate and prosecute alleged crimes related to digital assets, while simultaneously increasing enforcement risk for financial institutions involved in the transmission of digital assets. digital assets.

White House Priorities

Along with the DOJ, the White House announced additional priorities for regulators and enforcement in the digital asset sector. For the Securities and Exchange Commission and the Commodity Futures Trading Commission, the Biden administration has encouraged aggressive investigations and enforcement action against alleged illegal practices in the digital asset space.

SEC Chairman Gary Gensler has already filed or settled more than 30 cryptocurrency-related lawsuits, and we can expect more to come. For the Treasury Department, the White House has committed to devoting more resources to identifying, tracking, and analyzing risks in digital asset markets, as well as completing a funding risk assessment illicit on decentralized finance by the end of February and an assessment on non-fungible tokens by July.

The expansion of enforcement resources to tackle alleged crimes related to digital assets indicates that the law is cracking down on bad actors in cryptocurrency. As the DOJ expands the ability of federal prosecutors and federal law enforcement officers to understand and control the digital asset industry, the cryptocurrency industry should strengthen compliance by understanding the laws and related regulations and anticipating future changes that may arise from DOJ or White House proposals. .

This article does not necessarily reflect the views of Bloomberg Industry Group, Inc., publisher of Bloomberg Law and Bloomberg Tax, or its owners.

Write for us: guidelines for authors

Author Information

Andrew S. Boutros is regional chairman of the Decherts White Collar Practice. A former federal prosecutor, he manages white-collar cases, internal and cross-border investigations and complex litigation. He is also a lecturer in law at the University of Chicago Law School.

David N. Kelley is a senior partner at Dechert and a former U.S. Attorney for the Southern District of New York. He has over three decades of experience in commercial litigation, federal securities, grand jury investigations, and congressional investigations.

John R. (Jay) Schleppenbach is an associate with the white-collar law firm Decherts, where he represents large corporations in internal investigations and litigation matters. A former appellate attorney, he also coached Northwestern Law’s international arbitration advocacy team.

[ad_2]