Department Of Justice Launches Dedicated Crypto Enforcement Team

Biden Administration Wants to ‘Protect’ U.S. Citizens

According to Lisa Monaco, the Deputy Attorney General, their express goal is to step up the fight against ransomware groups. The fight against such misuse of cryptocurrencies aims to boost user confidence on these platforms.

Here, the team would help protect U.S. citizens against online financial crimes, and NCET would pursue their cases as authorized by the DoJ.

Coincidentally, this was less than a week before the U.S. Security and Exchange Commission (SEC) approved, for the first time in the country, the launch of the first Bitcoin Futures Exchange-Traded Fund (ETF).

Specifically, the enforcement team will actively help trace and recover assets lost through extortions and other extractive schemes involving cryptocurrencies. They will also direct special focus on crimes perpetrated by cryptocurrency exchanges, mixing services, and other money laundering facilitating infrastructure.

A Reuters article quoted her saying,

“Cryptocurrency exchanges want to be the banks of the future. Well, we need to make sure that folks can have confidence when they’re using these systems, and we need to be poised to root out abuse. The point is to protect consumers.”

This is an escalation of Biden’s government involvement and direct enforcement in the rapidly growing cryptocurrency and blockchain space. The government appears to be setting the framework, marshaling regulators, to deter all forms of misconduct in the emerging digital marketplaces involving alternative currencies.

Digital currencies like Bitcoin have anonymity attributes and are cross-border means elements can use them to transfer funds from extortions in an attempt to launder. However, their traceability translates to mapping, which helps authorities nap perpetrators.

In recent times, nonetheless, the proliferation of privacy-focused cryptocurrencies like Monero present challenges. The situation is even made complex with the increasing adoption of decentralized exchanges, which skirts registration and submission of personal information, making oversight more difficult, a playfield for abusers.

Pinning on the False Claims Act Guidance

The Civil Cyber-Fraud Initiative will use the guidance of the False Claims Act to pursue cyber illegalities committed by government contractors and grant recipients.

The False Claims Act can be traced back to the Reconstruction and is critical in whistleblower protection. It has been successfully deployed in Medicare and Medicaid, helping deter fraud.

With the incentive, private citizens are now empowered to call out any form of fraud in government, allowing for fund recovery and subsequent compensation on success. The Civil Cyber-Fraud Initiative is a way of cushioning U.S. information systems against risks, preventing the installation of sub-par products, offering mediocre services, knowingly violating obligations, or even misrepresenting cyber security practices and standards.

With the Civil Cyber-Fraud Initiative and the creation of the NCET, analysts believe this will go a long way in helping the DoJ prosecute some of the complex and labyrinthine cryptocurrency-related abuses.

NCET, on its part, will provide the necessary tools and training to the DoJ, while the Civil Cyber-Fraud Initiative will be critical in holding government contractors and grant recipients accountable for their actions. Overall, this will give the companies firepower to deal with cyber threats, even those involving cryptocurrencies.

Nonetheless, even though recovery could be possible, the immutable nature of cryptocurrency transactions and the distributed base would still present challenges preventing instant recovery.

Subsequently, as impressive as these initiatives are, cryptocurrencies might still present a challenge to law enforcement and, notably, the enforcement of criminal orders since they could be impaired on the regulatory and technical sides of the equation.

Complexity has already been picked out, especially on tax evasion, terrorist financing, and extortion where privacy coins like Monero are involved.

Unlike Bitcoin and other transactional cryptocurrencies, Monero uses a mix of advanced transaction obfuscating technologies which render law enforcement tools useless.

DoJ Hiring the NCET Director

Despite potential headwinds and even loopholes that may tip in favor of ransom groups, the DoJ is proceeding and seeking to hire experts as part of the NCET team.

In a job posting in late October, the DoJ was searching for the enforcement team’s director. He will spearhead the investigation and prosecution of individuals or groups misusing cryptocurrencies.

For this role, the expert will consult with the United States Attorney’s Offices and other investigative agencies, including state and local law enforcement agencies.

In addition to necessary collaboration for swift prosecution, the NCET director will be tasked with reporting to the Financial Crimes Enforcement Network (FinCEN), the SEC, and intelligence agencies.

Overall, the NCET team will comprise experts mainly in anti-money laundering and cybersecurity.

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