DOJ Creates Cryptocurrency Enforcement Team

Troutman Pepper
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Troutman Pepper

[co-author: Dominyka Plukaite]

On October 6, Deputy Attorney General Lisa O. Monaco announced the creation of a National Cryptocurrency Enforcement Team (NCET) to handle criminal misuses of cryptocurrency. According to the press release, NCET will focus specifically on crimes committed in virtual currency exchanges, mixing and tumbling services, and money launderers. The team’s additional duties will include assisting in tracing and recovering assets lost to fraud or extortion, including cryptocurrency payments lost to ransomware groups.

The creation of NCET combines the expertise of the Department of Justice (DOJ) Criminal Division’s Money Laundering and Asset Recovery Section (MLARS), Computer Crime and Intellectual Property Section (CCIPS), and other DOJ Criminal Division sections. Their combined expertise will help coordinate prosecutorial and enforcement efforts in the continuously evolving field of cryptocurrency. “Today we are launching the [NCET] to draw on the Department’s cyber and money laundering expertise to strengthen our capacity to dismantle the financial entities that enable criminal actors to flourish — and quite frankly to profit — from abusing cryptocurrency platforms,” said Deputy Attorney General Monaco. “As the technology advances, so too must the Department evolve with it so that we’re poised to root out abuse on these platforms and ensure user confidence in these systems.”

Because cryptocurrency is used in a wide range of criminal activity, NCET’s creation will strengthen the development of expertise as it relates to cryptocurrency’s different criminal misuses, allowing the DOJ to better understand and address such misuses. According to the press release, NCET will also substantially support international, federal, state, local, tribal, and territorial law enforcement authorities wrestling with these new forms of criminal tradecraft. The team will work closely with other federal agencies, law enforcement, and experts throughout the government.

Previously, we reported on the Securities and Exchange Commission’s (SEC) request for additional authority from Congress to regulate cryptocurrencies here and here. While the SEC has opined that cryptocurrencies can implicate securities laws, Congress has yet to act and address any gaps in regulatory authority to prevent transactions, currencies, and platforms potentially involved in fraud or other wrongdoings.

Our Take. NCET’s creation will draw on the DOJ’s cyber and money laundering expertise, thereby strengthening the Department’s capacity to dismantle financial entities and their individual actors who criminally misuse cryptocurrency. While it remains unclear which agency or agencies will ultimately regulate cryptocurrency, the DOJ has made clear that it will begin taking action against wrongdoers, regardless of the gap in regulation.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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