DOJ Signals Intent to Crack Down on Crypto Crime

The Department of Justice has tasked a group of prosecutors with its crypto investigations and prosecutions.

The creation of the Digital Asset Coordinators (DAC) network on September 16 came amid a report that made it clear that the US Department of Justice planned to coordinate crypto investigations by more than a dozen law enforcement teams. law from the top with a group of specially trained prosecutors.

Led by the year-old National Cryptocurrency Enforcement Team (NCET) and inspired by two similar networks on cybersecurity and on hacking and intellectual property theft, the DAC “will ensure that the Department and its prosecutors are in the best position to combat ever-evolving crime”. uses of digital asset technology,” Assistant Attorney General Kenneth Polite Jr. of the department’s Criminal Division noted in the Sept. 16 announcement.

The announcement from the network of more than 150 prosecutors was the main announcement in Attorney General Merrick Garland’s report on “The Role of Law Enforcement in Detecting, Investigating and Prosecuting Criminal Activity Related to Digital Assets” , released pursuant to President Biden’s decision. executive order calling on all agencies to develop a regulatory framework for the digital asset industry, which includes cryptocurrencies, stablecoins, non-fungible tokens (NFTs), and even a potential digital dollar.

This prioritizes the need for new laws overseeing virtual asset service providers (VASPs), including money services businesses, and strengthening and expanding laws covering unlicensed money transfer businesses.

It also calls for close coordination with regulatory agencies such as the Securities and Exchange Commission (SEC), Federal Trade Commission (FTC), and Consumer Financial Protection Bureau (CFPB).

move money

The report also detailed five clusters of legislative and regulatory actions that “could bolster efforts to disrupt, investigate and prosecute criminal activity related to digital assets.”

It starts with three legislative priorities he has for Congress:

  • Extend the ban on disclosing subpoenas that traditional financial institutions work under to virtual asset service providers, including exchanges and fund issuers that act as money services businesses.
  • Strengthen the ban on operating an unlicensed money transfer business, which he called “a key prosecution tool in digital asset cases.”
  • Increasing the statute of limitations for crimes involving digital assets from five to 10 years, as well as extending “the period during which requests for assistance from foreign governments weigh against the statute of limitations.”

The CAD network

Installed in U.S. Attorneys’ District Offices and Special Litigation Divisions, the DAC Network will serve “as a forum for prosecutors to obtain and disseminate investigative and prosecuting training, technical expertise, and advice.” digital asset crime…a digital asset subject matter expert, serving as a front-line source of information and advice on legal and technical issues related to these technologies.

In addition to coordinating the investigation and prosecution of crimes and the enforcement of regulatory violations in agencies ranging from the FBI and Secret Service to the IRS-Criminal Investigation Division (IRS-CI), the “DAC Network will also serve source of information and discussion on new forms of digital assets, such as [decentralized finance] DeFi, smart contracts and token-based platforms.

The DAC Network will also focus on the “unique international considerations of the crypto ecosystem,” advocating for and building relationships with foreign authorities to pave the way for cross-border investigations.

All together now

The DOJ has grouped the various agencies and regulators whose digital asset activities will be coordinated by the DAC network into nine major groups, starting with law enforcement. These include the DOJ’s own criminal and national security divisions, as well as the FBI, the Drug Enforcement Agency (DEA), and the US Marshals Service.

Next is the Department of Homeland Security, including the Secret Service, and the IRS-CI division of the Treasury Department.

The primary role of the DAC network will be to oversee and assist in these prosecutions. However, the report devotes a lot of space to detailing how various regulatory bodies have been involved in digital asset oversight and action.

These agencies “have continued to take proactive measures in recent years in response to the rise of digital assets,” the report said. “It is a key policy goal of the United States to ensure that digital assets do not undermine existing financial regulations and to strongly incentivize institutions and exchanges to operate within the existing regulatory framework related to digital assets.

“Regulatory agencies play a crucial and multifaceted role in achieving this policy goal.”

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