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According to the latest reports, the United States Department of Justice (DOJ) is planning a full-scale crackdown on illegal and illicit activities on crypto trading platforms. The U.S. DOJ’s National Cryptocurrency Enforcement Team, headed by Director Eun Young Choi, has already taken a strong stance on the issue and has promised strict action. The Department of Justice incorporated the National Cryptocurrency Enforcement Team (NCET) in October 2021 to combat crypto-oriented scams and maintain adequate law and order in the industry.
The Scope of NCET’s Crackdown on Crypto Businesses
In a recent interaction with the Financial Times, NCET Director Eun Young Choi communicated her intentions of targeting crypto exchanges that promote, allow, or ignore illicit activities like money laundering on their platforms. She also stressed how crypto-related scams and crimes have shot up. She said, “We are seeing the scale and the scope of digital assets being used in a variety of illicit ways grow significantly over the last four years.” Commenting on the role of crypto exchanges and other similar platforms in these crimes, she added, “But on top of that, they are allowing 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 are going to have a multiplier effect.” Choi also confirmed that the NCET’s sole focus would be to hunt down such platforms and send a “deterrent message” to those who are not abiding by money laundering rules. She added that the NCET will also investigate crypto businesses that circumvent compliance, know-your-customer, and risk mitigation procedures.
Over the last year or so, crypto firms in the United States of America have been constant subjects of scrutiny. Binance, the world’s largest cryptocurrency exchange, also had to get its hands dirty with several regulatory bodies questioning the integrity of their operations in the U.S. FTX, another established cryptocurrency exchange, had to deal with a similar fate while its founder, Sam Bankman-Fried was recently charged with fraud, money laundering, and conspiracy charges. While one might argue that regulatory attacks on platforms of global importance like Binance might impact the credibility of the entire industry, Choi made it clear that her department will not judge the integrity and compliance of companies based on their size and stature.
Beyond cryptocurrency exchanges, the U.S. Department of Justice and NCET also plan to keep an eye on various investment scams, which amounted to losses worth $2.5 billion in 2022, a 183% hike from the previous year. Choi specifically spoke about “pig butchering” scams that involve scammers building long-term relationships with victims and scamming them of large sums of funds. She also mentioned that the department will also focus on preventing DeFi (decentralized finance) scams that leverage vulnerabilities in concepts like chain bridges to extract funds.
DOJ’s History with Crypto Scammers
The crypto-oriented regulatory climate in the United States of America has been very strict and unforgiving. And the DOJ has played a significant role in that context. Last month, it announced that it had captured virtual currency worth $112 million linked to cryptocurrency investment scams. It also filed charges against a man who scammed a DeFi platform of cryptocurrency worth $110 million. In another instance, the DOJ held a Vietnamese national Minh Quoc Nguyen for money laundering and identity theft involving a cryptocurrency platform named ChipMixer. The organization also achieved a breakthrough when it arrested the founder of Bitzlato, a questionable digital exchange with alleged links to the dark net. It claimed that Bitzlato’s founder transmitted close to $700 million in illicit cryptocurrencies.
These instances are a clear indication of the DOJ’s commitment to ensuring financial integrity in the country. And, the recent comments made by Eun Young Choi, Director, NCET, only hint toward its strengthened resolve of combating crypto scams and safeguarding the citizens. All in all, considering the modus operandi of regulatory bodies in the region as well as the U.S. DOJ’s strong stance on crypto enforcement, the industry may witness stricter focus and audits on compliance and mitigation procedures.
Notably, the United States of America is considered to be one of the strictest nations when it comes to regulatory guidelines and compliance adherence rules in the crypto industry.
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