DOJ to Go After Crypto Exchanges Aiding Crime
- The DOJ plans to commence enforcement actions against crypto exchanges that ignore compliance and risk management measures.
- Choi’s comments come after a turbulent year for the cryptocurrency sector, which saw the demise of Terraform Labs, Three Arrows Capital, and FTX.
- The DOJ is also focusing on cross-chain bridges as part of its effort to combat theft and hacks in the DeFi space, which has historically been a popular target for criminal activity.
Amidst growing tensions between crypto companies and US regulators, Eun Young Choi, director of the National Cryptocurrency Enforcement Team (NCET), says the U.S. Department of Justice (DOJ) plans to take action against cryptocurrency exchanges that help criminals launder money.
Director Choi noted that crypto crimes have “significantly” increased over the last four years, and the DOJ will target crypto exchanges that allow “criminal actors to easily profit from their crimes and cash out.”
According to Choi, the department’s attention is on companies that ignore anti-money laundering or know-your-customer regulations or who don’t take full advantage of compliance and risk management measures. She remarked that “we hope that by focusing on those types of platforms, we’re going to have a multiplier effect.”
The DOJ introduced the NCET in October 2021 as part of an effort to take on the crypto underworld. The department focuses on handling crypto-related crimes, cybercrime, and money laundering. Choi believes that the increased adoption of digital assets has matched their use in crimes. She added that the department will not take a company’s size into account when determining potential charges.
Choi further revealed that the NCET plans to crack down on investment fraud schemes that involve fraudsters cultivating relationships with victims within a few months. US authorities reported uncovering six of these scams valued at around $112 million last month.
Estimates from the Federal Bureau of Investigation (FBI) show that investment fraud wiped off as much as $3.31 billion in 2022, with over $2.5 billion of the total coming from frauds involving cryptocurrencies.
Since taking over as head last year, Choi has shown a clear commitment to maintaining law and order in the cryptocurrency sector. Although Choi did not name any exchanges, crypto enthusiasts believe several top exchanges like Binance will likely face increased scrutiny.
Binance, One of the biggest cryptocurrency exchanges, has come under fire for allegedly engaging in illicit trading in the US. Binance has maintained its innocence, but US regulators continue to hunt for wrongdoers in the industry.
Some crypto experts have raised concerns about the growing actions against crypto exchanges. For example, Brian Armstrong, the CEO of Coinbase, declared that the exchange might move its headquarters outside of the US if regulatory frameworks do not change.
Lawrence has covered some exciting stories in his career as a journalist, he finds blockchain-related stories very intriguing. He believes Web3 will change the world and wants everyone to be a part of it.
