The new National Cryptocurrency Enforcement Team (NCET) that the Department of Justice is forming will focus on investigating and prosecuting criminal misuse of cryptocurrency, but DOJ’s history of working with federal regulatory agencies on high-profile civil enforcement actions shows that crypto businesses willfully violating regulatory requirements should be wary of the NCET as well.
In announcing the creation of the NCET, the DOJ said the team will “tackle complex investigations and prosecutions of criminal misuses of cryptocurrency, particularly crimes committed by virtual currency exchanges, mixing and tumbling services, and money laundering infrastructure actors.” Under Assistant Attorney General for the Criminal Division Kenneth A. Polite Jr., the NCET will consist of a team of attorneys drawn initially from the Criminal Division’s Money Laundering and Asset Recovery Section (MLARS) and Computer Crime and Intellectual Property Section (CCIPS), as well as assistant U.S. attorneys detailed to the Criminal Division.
It is important to note that the DOJ stated that the NCET’s approach will be “informed by” the department’s Cryptocurrency Enforcement Framework, released in October 2020. This framework limits the DOJ’s enforcement activity to illicit uses of cryptocurrency and emphasizes the importance of interagency partnerships with regulatory agencies such as FinCEN, the OCC, SEC, and CFTC.
The DOJ has already undertaken successful high-profile cryptocurrency enforcement actions that demonstrate how the NCET would work in coordination with regulatory agencies. The department collaborated on joint criminal and civil enforcement actions with FinCEN against Bitcoin mixer Larry Dean Harmon, and with FinCEN and the CFTC against cyptocurrency exchange BitMEX.
The NCET will focus further DOJ attention and resources on a range of problems associated with cryptocurrencies, including ransomware payments, money laundering, and violations of the BSA, banking laws, and securities and commodities laws by cryptocurrency exchanges and other actors. It should be cause for concern for any business or person in the cryptocurrency field acting with questionable legality, and a further incentive to comply with federal laws and regulations.
Bloomberg Law subscribers can find information on U.S. federal and state regulation of cryptocurrency activity on our Fintech Compliance resource.
If you’re reading this on the Bloomberg Terminal, please run BLAW OUT <GO> in order to access the hyperlinked content or click here to view the web version of this article.