A team of high-level U.S. government attorneys has outlined priorities for enforcing and prosecuting individuals and entities who have committed crypto-related crimes.
Enforcement officials from the U.S. Department of Justice (DOJ), the Securities and Exchange Commission (SEC), and the Commodity Futures Trading Commission (CFTC) held a panel discussion at the American Bar Association’s annual institute on October 26.
In addition to corporate players, lawmakers are closely monitoring individuals according to a report of the event by Law 360. The trial of individuals in white-collar cases is a top priority, said Nicholas McQueed, principal deputy assistant attorney general of the DoJ’s criminal division.
He added that the department is expanding the use of data-based search in such national cases related to cryptocurrency. The DOJ is forming a special group within the FBI to assist with its investigation and prosecution to work with its fraud department.
SEC Enforcement Director Gurbir Grewal commented on the agency’s extended investigation into unregistered and fraudulent initial currency offerings (ICOs), unregistered crypto exchanges and crypto lending and rewards programs. “We will make sure that those players and actors follow the rules,” he said before adding:
“So we will keep a close eye on gatekeepers like auditors and audit firms, attorneys and underwriters.”
In early September, the SEC threatened to take legal action against Coinbase for its Stablecoin Yield program, Land. Coinbase has since canceled plans to launch the service.
The SEC targeted Do Cowan, CEO of Terraform Labs, with a subpona in September. As a resident of South Korea, Kwon has challenged that the regulator has no jurisdiction.
In October 2020, the DoJ filed criminal charges against four BitMEX executives for conducting a derivative exchange, with a trial scheduled for March 2022.
Related: Regulatory and privacy concerns lie behind the SEC’s threat to Coinbase
Vincent McGonagall, acting director of enforcement for the CFTC, said he was also concerned about the digital assets and decentralized finance (DeFi) sector. He noted that cryptocurrency space may not be the only component of illegal activity because other factors, such as Forex, may be involved:
“In the digital asset space, we have taken a number of steps against entities where they are offering digital assets, Bitcoin or others on a margin or financial basis.”
Government agencies are clearly increasing activity against crypto companies and individuals.
In mid-August, lawmakers called on the SEC and the CFTC to form a joint working group on crypto assets to work out how to “effectively and efficiently use their current jurisdiction.” In late September, the CFTC charged 12 New York crypto options firms for failing to register.
On October 18, the New York Attorney General’s Office ordered crypto lenders to suspend operations. Celsius Crypto Lending Platform said it is not one of the two but is working with NY regulators.