Former SEC Official Questions Lack of DOJ Action in Crypto Cases

In a recently published post, John Reed Stark, a former official of the Securities and Exchange Commission (SEC), has expressed his bewilderment over the apparent lack of action by the U.S. Department of Justice (DOJ) in crypto-related cases, specifically regarding the parents of an entity referred to as SBF.

Stark, who has extensive experience in the field, serving close to two decades in the SEC Division of Enforcement, has observed what he terms an “extraordinary dearth” of U.S. DOJ prosecutions related to cryptocurrency, despite the numerous enforcement actions undertaken by the SEC.

Stark’s main concerns

Stark explicitly voiced his concerns regarding the non-inclusion of SBF’s parents as defendants by the U.S. DOJ and the SEC, stressing the contrast between the plentiful SEC enforcement actions and the scarcity of parallel criminal investigations and prosecutions by the DOJ in the realm of cryptocurrency.

Stark noted that Gemini boss Tyler Winklevoss had dismissed such allegations as “super lame,” likening them to “manufactured parking tickets.” Meanwhile, Coinbase and Binance treat their charges as “badges of honor,” Stark notes.

The former SEC official explained that the SEC, primarily being a civil enforcement agency, can only impose so much restraint. Without the looming possibility of DOJ prosecutions, entities may continue to trivialize the SEC’s regulatory interventions as mere operational costs.

Potential fraud charges against Binance

According to a report by Semafor, the DOJ is currently contemplating pressing fraud charges against Binance, the world’s largest cryptocurrency exchange. However, federal prosecutors are wary of the potential repercussions, such as market instability and consumer fallout, that might ensue from a possible indictment and are exploring alternative resolutions like fines or non-prosecution agreements.

Meanwhile, the Justice Department is restructuring its National Cryptocurrency Enforcement Team (NCET), aiming to reinforce its capability to handle the increasing volume of cryptocurrency-related investigations. This move will see NCET becoming a permanent segment, focusing on computer-related crimes within the department’s criminal division.