US DOJ is fighting crypto crime

The US Department of Justice (DOJ) has released a new report on crypto crime with detailed recommendations for legal reform. In addition, a network of experts has been formed.

US takes steps to combat crypto crime

The United States appears to be doing what it can to counter the criminal use of cryptocurrencies, which is becoming a growing problem around the world. The anonymity and privacy features of digital assets, and the difficulty in tracking transactions, make them increasingly used tools for organized crime. For the US federal government, these uses must be absolutely limited by all means, and should also start with precise regulation of the sector

In an effort to curb the phenomenon, the US Department of Justice (DOJ) announced on Friday that its criminal division has established the national Digital Asset Coordinator (DAC) network, which is to be focused precisely on preventing and uncovering criminal uses through cryptocurrencies.

According to the DoJ’s announcement, this team of experts will serve to:

“Furtherance of the department’s efforts to combat the growing threat posed by the illicit use of digital assets to the American public.”

The creation of the team follows the publication of a detailed DOJ report, titled “The Role of Law Enforcement in Detecting, Investigating, and Prosecuting Criminal Activity Related to Digital Assets,” which explains how law enforcement should counter the criminal use of cryptocurrencies.

The detailed report specifically outlines three main categories of illicit uses: 

1. cryptocurrency as a means of payment or a means to facilitate criminal activity; 
2. the use of digital assets as a means to conceal illicit financial activities; 
3. crimes involving or compromising the ecosystem of digital resources.

The DOJ press release

The DOJ in the press release issued to present the report and the formation of the DAC, explains:

“First, in response to the March 9 Executive Order, the department’s report discusses the manner in which illicit actors are exploiting digital asset technologies; the challenges that digital assets pose to criminal investigations; initiatives that the department and law enforcement agencies have established as part of whole-of-government efforts to more effectively detect, investigate, prosecute, and otherwise disrupt these crimes; and recommended regulatory and legislative actions to further enhance law enforcement’s ability to address digital asset crimes.

As digital assets play a growing role in our global financial system, we must work in tandem with departments and agencies across government to prevent and disrupt the exploitation of these technologies to facilitate crime and undermine our national security,” said Attorney General Merrick B. Garland. “The efforts announced today reflect the commitment of the Justice Department and our law enforcement and regulatory partners to advancing the responsible development of digital assets, protecting the public from criminal actors in this ecosystem, and meeting the unique challenges these technologies pose.”

This decision is also a result of President Biden’s executive order issued last March calling on all regulators to analyze the effects of cryptocurrencies on American finance and society. 

Deputy Attorney General Kenneth A. Polite Jr. of the Justice Department’s Criminal Division, said:

“Developments in digital assets have created a new landscape for criminals to exploit innovation to further significant criminal and national security threats domestically and abroad.

Through the creation of the DAC Network, the Criminal Division and the National Cryptocurrency Enforcement Team will continue to ensure that the Department and its prosecutors are best positioned to combat the ever-evolving criminal uses of digital asset technology.”

The new team of experts

Led by the Justice Department’s National Cryptocurrency Enforcement Team (NCET), the new task force will consist of more than 150 federal prosecutors designated by the US Attorneys’ Offices. The team will be equipped with all the resources, both financial and specialized, to take effective action against crypto criminals.

It will have offices and it will serve as the department’s primary forum for prosecutors to obtain and disseminate specialized training, technical expertise and guidance on the investigation and prosecution of digital asset crimes. NCET Director Eun Young Choi chaired the first meeting of the DAC network on 8 September, as informed by the Doj.

The DOJ explained that members of the DAC network will learn:

“The application of existing authorities and laws to digital assets and best practices for investigating digital assets-related crimes.” They include drafting search and seizure warrants, restraining orders, criminal and civil forfeiture actions, indictments, and other pleadings.”

This news was immediately greeted positively by the crypto industry, which feels victimized by these criminal uses of cryptocurrencies, as well as having to endure attacks that are often considered persecutory by the SEC and other federal bodies, for supposed regulatory violations, as in the long-running case between Ripple and the SEC, who have been fighting a very tough legal battle for two years. Ripple’s own defense attorney in this case, James K. Filan broke the news of the DOJ decision on his Twitter profile:

#XRPCommunity #XRP The Justice Department is establishing a nationwide Digital Asset Coordinator Network “to combat the growing threat posed by the illicit use of digital assets to the American public.”https://t.co/Kgi3N41Q02

— James K. Filan 🇺🇸🇮🇪 113k (beware of imposters) (@FilanLaw) September 16, 2022

But according to others, this decision of the DOJ could also be yet another attempt to put the cryptocurrency sector under control, to defend the strength and centrality of the dollar and traditional finance, which has repeatedly raised the alarm about the dangers to the financial stability of cryptocurrencies, especially after the Terra case and the failures that followed of 3AC, Voyager Digital and Celsius.