- In response to President Biden’s March 9, 2022 Executive Order on Digital Assets, DOJ has created a team of prosecutors tasked with becoming experts in investigating and prosecuting suspected criminal activity in digital assets and cryptocurrencies. announced the formation of a new network.
- DOJ also released a report containing priority legislative and regulatory goals for digital asset crime, including tougher penalties, longer statutes of limitations, and expanded data loss prevention provisions that offend officers or agents of financial institutions. To notify the customer when a record is summoned.
- These latest developments further strengthen the Biden administration’s ongoing efforts to strengthen regulation and enforcement oversight of the digital asset industry.
- Digital asset market participants should continue to monitor announcements by U.S. regulators and law enforcement agencies and proactively prepare for increased government scrutiny.
The U.S. Department of Justice (“DOJ”) announced on September 16, 2022, the establishment of a nationwide Digital Asset Coordinator (“DAC”) network of federal prosecutors.1 As discussed in some recent OnPoints2, this is the latest in a series of actions by U.S. law enforcement agencies to strengthen their ability to prosecute suspected criminal activity in the field of digital assets and cryptocurrencies. Acts as an expert in and develops best practices for investigating suspected digital asset-related crimes. The DAC is made up of more than 150 federal prosecutors from the United States Attorney’s Office and other Special Litigation Divisions nationwide.3
President Biden’s March 2022 Executive Order on Digital Assets
The establishment of the DAC is part of the Department of Justice’s response to President Biden’s March 9, 2022 Executive Order on Ensuring the Responsible Development of Digital Assets.Four what we wrote at the time.Five Noting the astronomical growth of the digital asset market, from a market capitalization of US$14 billion in November 2016 to a market capitalization of US$3 trillion in November 2021, the executive order calls for enforcement action and market capitalization. We recognized the need for adjustments in regulation. To protect consumers and combat fraudulent finance.6 The Attorney General has 180 days to submit a report to the President on the role of law enforcement in prosecuting criminal activity related to digital assets, including cryptocurrencies, stablecoins and other digital currencies. I was.
The DOJ said in a report released alongside the DAC’s announcement that the network “will be an important part of the State Department’s efforts to continue to meet the ever-evolving challenges posed by the unauthorized use of digital assets.” says.[.]”7 The DAC is modeled after other coordinator programs established by the DOJ: the Computer Hacking and Intellectual Property Network and the National Security Cyber Specialist Network. We will work with and support the efforts of the National Cryptocurrency Enforcement Team (“NCET”), an initiative focused on cryptocurrency exchanges and affiliates established by DOJ in February 2022.8 NCET is currently involved in the investigation and prosecution of Hydra, Bitfinex, Helix, and BitMex.9
DOJ Reports and Priority Regulations and Legislative Proposals
The report also includes categories of digital asset misuse, case studies of successful law enforcement efforts to reduce digital asset crime, initiatives DOJ and other agencies have established to stop digital asset crime, and Recorded recommendations for appropriate regulatory and legislative action. DOJ has targeted three priority regulatory and legislative proposals to combat alleged cryptocurrency crime. Agencies that notify customers when records are sought via certain types of law enforcement subpoenas. (2) Strengthen the penal provisions of the law and amend the criminal law for operating unlicensed remittance businesses to reach digital assets. (3) amending the statute of limitations to 10 years for all offenses involving the transfer of digital assets;Ten These priority proposals alone would give DOJ significantly greater powers in investigating and prosecuting digital asset crimes. Additionally, the proposal would impose additional scrutiny and risk on financial institutions involved in transmitting digital assets.
White House Releases Fact Sheet on Interagency Response to Executive Order
On the same day that DOJ announced the DAC and published its report, the White House released a fact sheet outlining the agency’s response to the March 9, 2022 executive order.11 In total, the White House has received nine reports pursuant to an executive order detailing what the Biden administration has described as a framework for digital asset development. Factsheet explains the risks digital assets pose to consumers, investors and businesses, including the risk of price volatility and outright fraud, with nearly 600% more financial losses from digital asset fraud in 2021 than the previous year I am reporting that
White House priorities for regulating the digital asset industry
In addition to establishing the DAC, the White House has outlined additional steps for regulation and enforcement in the digital asset industry.
- Encourage the SEC and CFTC to aggressively pursue investigations and enforcement actions for suspected illegal activity in the digital asset space.
- Encourage the CFPB and FTC to redouble their efforts to monitor consumer complaints and enforce allegedly unfair, deceptive, or abusive practices regarding digital assets.
- Identify, track and analyze risks associated with digital asset markets through the Ministry of Finance.When
- We will complete the financial fraud risk assessment for decentralized finance by the end of February 2023 and the non-fungible token assessment by July 2023.
thoughts of parting
Based on the actions of the Biden administration and various government agencies, regulation and enforcement of cryptocurrencies and digital assets is here. This is especially true when it comes to DOJ and its law enforcement partners, who have their sights set on criminal activity in the digital asset space. His establishment of DAC and NCET this year demonstrates a commitment to increasing the ability of federal prosecutors and federal law enforcement agencies to understand and police the digital asset industry.as recommended in October 2021there are several ways in which digital asset market participants can prepare for enhanced enforcement activity.
- creating and/or updating policies or procedures regarding compliance with applicable cryptocurrency-related laws and regulations;
- Update and enhance existing risk-based anti-money laundering (“AML”), Know Your Customer (“KYC”), and financial crime compliance programs to include cryptocurrency screening, monitoring, and reporting.When
- For companies investing in digital assets, we take additional care to understand the compliance programs of cryptocurrency-related service providers and the functions and uses of the digital assets they hold.
- press release, Department of Justice Releases Report on Digital Assets, Launches Nationwide NetworkU.S. Department of Justice (September 16, 2022), https://www.justice.gov/opa/pr/justice-department-announces-report-digital-assets-and-launches-nationwide-network [hereinafter, the “DOJ Press Release”].
- SEC Files First-Ever Insider Trading Lawsuit Involving Digital Assets in Civil Lawsuit Parallel to SDNY Criminal Indictment (15 August 2022), https://www.dechert.com/knowledge/onpoint/2022/8/sec-brings-first-ever-insider-trading-action-involving-digital-a.html; SEC Reportedly Adds Another Dimension to Its Crypto Enforcement Push: Insider Trading (5 July 2022), https://www.dechert.com/knowledge/onpoint/2022/7/cryptotracker-entry-re-sec-crypto-exchange-inquiry.html;THe prepares for increased cryptocurrency market – execution activity (October 20, 2021), https://www.dechert.com/knowledge/onpoint/2021/10/the-cryptocurrency-market—prepare-for-an-update-in-enforcement.html.
- Dustin Waltz Justice Department forms national network of prosecutors focused on cryptocrimeThe Wall Street Journal (September 16, 2022), https://www.wsj.com/articles/justice-department-forms-national-network-of-prosecutors-focused-on-crypto-crime-11663322407?page=1.
- DOJ press release. Presidential Decree on Ensuring Responsible Development of Digital AssetsThe White House (March 9, 2022), https://www.whitehouse.gov/briefing-room/presidential-actions/2022/03/09/executive-order-on-ensuring-responsible-development-of-digital-assets/.
- Biden Executive Order to Ensure Responsible Development of Digital Assets: A Key Opportunity to Shape Blockchain and Cryptocurrency Policy (5 April 2022), https://www.dechert.com/knowledge/onpoint/2022/4/biden-executive-order-on-ensuring-responsible-development-of-dig.html.
- Attorney General’s Report Under Section 5(b)(iii) of Executive Order 14067: Law Enforcement’s Role in Detecting, Investigating, and Prosecuting Criminal Activities Involving Digital AssetsU.S. Department of Justice (September 6, 2022), https://www.justice.gov/ag/page/file/1535236/download [hereinafter, the “DOJ Report”].
- press release, Department of Justice Announces First Director of National Crypto Enforcement TeamU.S. Department of Justice (17 February 2022), https://www.justice.gov/opa/pr/justice-department-announces-first-director-national-cryptocurrency-enforcement-team.
- crystal kim Treasury and Justice Reports Tackle Crypto CrimeAxios (September 19, 2022), https://www.axios.com/2022/09/19/treasury-justice-reports-crypto-crime-biden-framework.
- identificationin .37-39.
- Factsheet: White House Announces First-Ever Comprehensive Framework for Responsible Development of Digital AssetsThe White House (September 16, 2022), https://www.whitehouse.gov/briefing-room/statements-releases/2022/09/16/fact-sheet-white-house-releases-first-ever-comprehensive-framework-for-responsible-development-of- digital assets/.