U.S. government attorneys target individuals and janitors to prosecute cryptocurrencies

A group of senior US government attorneys general has set out their priorities for the enforcement and prosecution of individuals and companies who have committed crypto-related crimes.

Law enforcement officials from the U.S. Department of Justice (DoJ), the Securities and Exchange Commission (SEC), and the Commodity Futures Trading Commission (CFTC) have spoken about the direction their agencies will take in the coming weeks at the Miami Association’s annual institute for economic crime on October 27th.

In addition to corporate actors, according to a Law360 event report, the legislature also takes a closer look at individuals. U.S. Department of Justice Assistant Assistant Nicholas McQuaid said prosecuting individuals in business cases is a top priority.

He added that the department is expanding the use of data-driven probes in such cases with cryptocurrencies. The DoJ forms a dedicated team within the FBI that works with its fraud department to assist with investigations and law enforcement.

Gurbir Grewal, SEC Director of Enforcement, commented on the agency’s increased scrutiny of unregistered and fraudulent Initial Coin Offerings (ICOs), unregistered cryptocurrency exchanges, and the cryptocurrency issuance and lending program. He said, “We’re going to make sure these players and actors follow the rules,” before adding:

“That’s why we’re going to scrutinize gatekeepers like accountants and accounting firms, lawyers and guarantors.”

In early September, the SEC threatened legal action against Coinbase over its Lend stablecoin profit program. Coinbase has since canceled plans to launch the service.

Do Kwon, the CEO of Terraform Labs, had also targeted the SEC in September with a subpoena that investigated Kwon, a resident of South Korea, on the grounds that the regulator was not competent.

In October 2020, the DoJ filed criminal charges against four BitMEX executives for illegally operating a derivatives exchange, the legal proceedings of which are scheduled for March 2022.

Related: Regulatory and privacy concerns follow the SEC threat to Coinbase

Acting enforcement director for the CFTC Vincent McGonagle said he was also concerned about digital assets and the decentralized finance (DeFi) sector. He noted that the crypto asset space may not be the only component of illegal activity as other factors such as foreign exchange may be involved:

“In the area of ​​digital assets, we have taken a number of measures against institutions that offer digital assets, Bitcoin or others on a trust or financing basis.”

Government agencies are clearly stepping up their activities against crypto companies and individuals.

In mid-August, lawmakers asked the SEC and the CFTC to form a joint working group on crypto assets so they could figure out how to “work together effectively using their existing jurisdiction”. In late September, the CFTC charged 12 New York crypto option firms for failing to register.

On October 18, the New York attorney general ordered that crypto lending companies cease operations. Cryptocurrency lending platform Celsius claims that they are not either, but instead work with regulators in New York.