Heightened Scrutiny: US Department of Justice’s Increasing Focus on Cryptocurrency

The crypto landscape is about to shift dramatically.

The Financial Times (FT) reports that Eun Young Choi, the director of the U.S. Department of Justice’s (DOJ) national cryptocurrency enforcement team, promises intensified scrutiny over illicit activities on digital platforms.

According to the FT, the DOJ plans to focus on crypto exchanges and entities that obscure transaction trails. Choi suggests the Department is keen on addressing companies that either perpetrate crimes themselves or facilitate them, such as by enabling money laundering.

In the Financial Times interview, Choi emphasized the potential ripple effect of this approach. “By focusing on those types of platforms, we’re going to have a multiplier effect,” she stated.

Notably, the department’s vigilance aims to deter businesses bypassing anti-money laundering or client identification rules, or those not investing in solid compliance and risk mitigation procedures.

As the FT noted, Choi leads a new unit dedicated to criminal misuse of digital assets, positioning the US under President Joe Biden’s administration as one of the jurisdictions with the toughest stance on crypto worldwide.

The crypto industry was rocked last year by the downfall of FTX, a previously perceived sound exchange. Its founder, Sam Bankman-Fried, is facing criminal charges, including wire fraud and conspiracy to commit money laundering. He has pleaded not guilty to all charges.

The Financial Times report also touched upon the US derivatives watchdog’s recent legal action against Binance, the world’s largest crypto exchange.

Despite concerns that a stricter crackdown could disrupt the industry, Choi dismissed the notion of ‘too big to fail.’ She asserted that a company’s size would not deter potential charges, especially if they’ve grown by disregarding US law.

The DOJ’s heightened scrutiny extends beyond platforms. The FT report revealed that the department aims to ramp up enforcement against investment scams, which have sharply increased victims’ losses.

The justice department also intends to address thefts and hacks involving decentralized finance (DeFi), particularly those involving exchanging different types of digital tokens or nascent projects with codes vulnerable to these attacks.

Cryptocurrency enforcement in the U.S. is stepping up its game. How this will reshape the landscape remains to be seen.

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