DOJ Pledges To Crack Down On Crypto Illegal Behavior

Key Points:

• The DOJ is pursuing cryptocurrency firms that either commit crimes or facilitate crimes such as money laundering.
• It is also after “mixers and tumblers,” which hide the trail of transactions.

According to the Financial Times, the U.S. Department of Justice’s (DOJ) National Encryption Law Enforcement Director promised to crack down on illegal behavior on digital platforms, saying that the scale of encryption crimes has grown “significantly” over the past four years.

Eun Young Choi, director of the DOJ’s National Cryptocurrency Enforcement Team, said the department is targeting cryptocurrency exchanges, “mixers and tumblers,” and laundering transactions to cover up the traces of transactions.

She said the DOJ targets companies that commit crimes or allow crimes to occur, such as facilitating money laundering. The focus on platforms will “send a deterrent message” to businesses that circumvent anti-money laundering or customer identification rules and fail to invest in solid compliance and risk mitigation programs.

“But on top of that, they’re allowing for all the other criminal actors to easily profit from their crimes and cash out in ways that are obviously problematic to us. And so we hope that by focusing on those types of platforms, we’re going to have a multiplier effect,” Choi said.

Choi is the Department of Justice’s first crypto tsar. She leads a new section focusing on illegal abuse of digital assets, as the United States, under Joe Biden’s administration, has emerged as one of the countries with the hardest position on cryptocurrency in the world.

In March, the DOJ accused Vietnamese citizen Minh Quoc Nguyen of money laundering and identity theft in connection with the activities of the crypto platform ChipMixer, alleging that Nguyen blatantly violated financial rules.

In February, the Justice Department accused a man of defrauding DeFi platform Mango Markets of $110 million in cryptocurrency.

Without identifying any particular firm, the NCET director said that a company’s size “is not something that the department will countenance” when evaluating prospective charges.

Choi’s remarks come after the crypto business was rocked last year by the collapse of FTX, an exchange largely regarded as a stable participant in a sometimes unpredictable market.

Sam Bankman-Fried, the creator of FTX, is facing federal allegations of wire fraud, conspiracy to conduct money laundering, and violating campaign finance rules. He has pled not guilty to all of the counts leveled against him.

The Justice Department will also concentrate on crimes involving decentralized finance, namely “chain bridges” where users may swap various sorts of digital currencies or embryonic initiatives with susceptible programming, she noted.

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