The top cryptocurrency czar in the US is promising to crack down on illegal behavior on digital platforms, saying that the amount of crypto crime has grown “exponentially” in the past four years.
Eun Young Choi, who was appointed director of the agency’s national currency enforcement team last year, said the DOJ is targeting cryptocurrency exchanges along with “mixers and tumblers” that block the path of transactions. She said the Justice Department targets companies that themselves commit crimes or allow them to happen, such as enabling money laundering.
“But on top of that, they allow all other criminal actors to easily profit from their crimes and spend money in ways that are clearly problematic for us,” she added. “And so we hope that by focusing on those types of platforms, we’ll have a multiplier effect.”
Choi said that focusing on the platforms would “send a deterrent message” to companies that skirt anti-money laundering or customer identification rules, and that are not invested in strict compliance and risk mitigation measures.
Choi is the Department of Justice’s premier crypto czar. She heads up a new unit focused on criminal misuse of digital assets as the United States has emerged under the Joe Biden administration as one of the jurisdictions with the most hardline stance on cryptocurrency worldwide.
“We’ve been seeing the volume and scope of digital assets used in a variety of illicit ways grow exponentially over the past four years, for example,” Choi said.
“I think this coincides with its increased adoption by the public more widely.”
Choi’s comments come after the cryptocurrency industry was rocked last year by the collapse of FTX, an exchange that was widely seen as a healthy player in an often volatile sector. FTX founder Sam Bankman-Fried faces criminal charges that include wire fraud, conspiracy to commit money laundering and campaign finance violations. He has pleaded not guilty to all charges.
Washington also targeted Binance, the world’s largest cryptocurrency exchange. The US derivatives watchdog in March sued the company and its CEO Changpeng Zhao for operating illegally in the country. The exchange said it had no official headquarters and did not serve US clients.
There are concerns in the industry that cracking down on systemically important companies like Binance will lead to more chaos in the broader industry.
But Choi, without naming any specific entity, said the company’s size was “not something the department would accept” while evaluating potential fees.
If a company “has amassed significant market share in part because it flaunts US criminal law,” the DOJ “can’t be in a position to give someone a pass because they say, ‘Well, we’ve evolved now,'” Choi said.
“Think about the message you’re going to send,” she added. “It can’t be the way we think when it comes to cryptography, when it comes to any white collar crime.”
Bitzlato, a digital exchange described by US authorities as a key link to the dark web, was shut down in January when its founder was arrested by the Justice Department for allegedly sending more than $700 million in illicit crypto money.
Beyond platforms, the Department of Justice’s crypto unit aims to bring more enforcement action targeting investment scams. The amount of money lost in such schemes has swelled from about $900 million in 2021 to more than $2.5 billion last year, according to For victim reports to the FBI. .
Choi highlighted the “pig slaughter” schemes, which are named after a Chinese phrase referring to pigs being fattened for slaughter, and involve scammers building relationships with long-term victims.
Last month, the Department of Justice seized more than $112 million worth of cryptocurrency linked to such scams.
Choi said the DOJ is also focusing on thefts and hacks involving decentralized finance, or DeFi, particularly “chain bridges,” where users can exchange various types of digital tokens, or startups with tokens that are vulnerable to these attacks.
In February, the Department of Justice charged a man with defrauding cryptocurrency platform DeFi Mango Markets of $110 million.
Choi said this is a “very important issue” for the Justice Department given that North Korean state-sponsored hackers have emerged as major actors in this area.
#crypto #czar #promises #crackdown #digital #platforms