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(Kitco News) –
Eun Young Choi, the U.S. Department of Justice’s top crypto enforcer, is planning a major crackdown on digital platforms and other sources of crypto crime, according to a Financial Times article published Monday.
Choi said the Justice Department will target cryptocurrency exchanges as well as the “mixers and tumblers” that help hide the trail of transactions from regulators. Choi was appointed by President Joe Biden last year to direct the DoJ’s new national cryptocurrency enforcement team.
She said that the department will be going after companies that commit crimes themselves or those that enable crimes such as money laundering to be perpetrated.
“They’re allowing for all the other criminal actors to easily profit from their crimes and cash out in ways that are obviously problematic to us,” she said of the enabler firms. “So we hope that by focusing on those types of platforms, we’re going to have a multiplier effect.”
Choi said she believed focusing on platforms will “send a deterrent message” to other digital assets businesses that are circumventing anti-money laundering (AML) or know-your-customer (KYC) rules, or do not have robust compliance and risk mitigation measures.
“We’re seeing the scale and the scope of digital assets being used in a variety of illicit ways grow significantly over the last, say, four years,” she said. “I think that is concurrent with the increase of its adoption by the public writ large.”
Choi also said that the size or market share of a crypto firm, and its potential systemic importance, “is not something that the department will countenance” when it considers potential charges.
In December, there were reports of a split between DoJ prosecutors that was delaying the conclusion of a long-running criminal investigation into Binance, the world’s largest cryptocurrency exchange. The investigation began in 2018 and is focused on Binance’s compliance with U.S. anti-money laundering laws and sanctions against states like Iran.
Without mentioning Binance or any other firm by name, Choi said that if a firm “has amassed a significant market share in part because they’re flaunting US criminal law” the DoJ cannot “be in a position where we give someone a pass because they’re saying ‘Well, now we’ve grown to be too big to fail’,” she said.
“Think of what message it would send,” she added. “It can’t be the way that we think when it comes to crypto, when it comes to any white-collar crime.”
The DoJ’s crypto unit will also focus on investment scams, which caused $2.5 billion in losses in 2022 compared to around $900 million in 2021 according to the FBI.
Choi said thefts and hacks involving decentralized finance (DeFi) are a “pretty significant issue” for the department as well, given that North Korea has emerged as a key actor in this area.
On Jan. 18, the DoJ announced that it had seized the website of the Bitzlato cryptocurrency exchange, which they referred to as a global cybercrime organization.
“Institutions that trade in cryptocurrency are not above the law and their owners are not beyond our reach,” said U.S. Attorney Breon Peace at the time. “As alleged, Bitzlato sold itself to criminals as a no-questions-asked cryptocurrency exchange, and reaped hundreds of millions of dollars’ worth of deposits as a result. The defendant is now paying the price for the malign role that his company played in the cryptocurrency ecosystem.”
The following day, the DoJ identified Binance as a major counterparty to Bitzlato, along with Russia-connected darknet market Hydra, and the Russia-based alleged Ponzi scheme known as “TheFiniko.”
Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.
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