The U.S. Department of Justice (DOJ) is expected to announce a series of enforcement actions against individuals and entities involved in illicit activities related to cryptocurrency, according to a report by Reuters.
The actions, which could be announced as soon as this week, are part of a coordinated effort by the DOJ and other federal agencies to crack down on the use of cryptocurrency for money laundering, ransomware attacks, tax evasion, and other crimes.
The DOJ has been investigating various aspects of the cryptocurrency industry, including exchanges, platforms, wallets, and service providers, for potential violations of anti-money laundering, sanctions, tax, and securities laws.
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Some examples of cryptocurrency-related crimes are:
Money laundering: This is the process of concealing the origin, ownership, or destination of illegally obtained funds by transferring them through various intermediaries or platforms that use cryptocurrency. For instance, in 2019, the DOJ charged two Chinese nationals for allegedly laundering over $100 million worth of cryptocurrency stolen by North Korean hackers from a cryptocurrency exchange.
Ransomware attacks: This is a type of cyberattack that encrypts the victim’s data or systems and demands payment in cryptocurrency to restore access. For example, in May 2021, the DOJ seized $2.3 million worth of bitcoin from the hackers who attacked Colonial Pipeline, a major U.S. fuel supplier, and disrupted its operations for several days.
Tax evasion: This is the illegal avoidance or reduction of tax liability by using cryptocurrency to hide income or assets from the tax authorities. For instance, in 2020, the DOJ indicted John McAfee, the founder of the antivirus software company McAfee, for allegedly evading taxes on millions of dollars earned from promoting various cryptocurrencies.
Securities fraud: This is the deception or manipulation of investors or markets by using cryptocurrency to offer or sell securities that are not registered or exempt from registration with the Securities and Exchange Commission (SEC). For example, in 2018, the DOJ charged two founders of Centra Tech, a cryptocurrency company that raised $32 million through an initial coin offering (ICO), for allegedly making false claims about their product and partnerships.
Some of the cases may involve civil or criminal charges, while others may result in settlements or forfeitures. The DOJ has not disclosed the names of the targets or the specific allegations.
The DOJ’s actions come amid growing regulatory scrutiny and enforcement activity around the world regarding cryptocurrency. In recent months, several countries have issued new rules or bans on cryptocurrency trading and mining, citing concerns over financial stability, consumer protection, environmental impact, and national security.
The DOJ’s actions also reflect the Biden administration’s priority to combat ransomware attacks, which have increased in frequency and severity this year. Many of the attacker’s demand payment in cryptocurrency, which they use to evade detection and prosecution.
The DOJ has previously announced several cases involving cryptocurrency-related crimes, such as the seizure of $2.3 million worth of bitcoin from the hackers who attacked Colonial Pipeline in May, and the indictment of four individuals for allegedly laundering $1.4 billion in cryptocurrency for darknet markets.
The DOJ has also established a Ransomware and Digital Extortion Task Force, which coordinates with other agencies and international partners to disrupt and deter ransomware operations and hold the perpetrators accountable.
The DOJ’s announcement is likely to have a significant impact on the cryptocurrency industry and market, as it may deter some investors and users from engaging in or facilitating illicit activities. It may also prompt more compliance and cooperation from the industry players with the law enforcement authorities.
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