NEW YORK—Decentralized finance products (DeFi) aren’t avoiding FinCEN’s crosshairs when it comes to the agency’s ongoing crackdown against the illicit use of cryptocurrency, a new report suggests.
While the aim of DeFi projects is to eliminate the middle man in consumer transactions, allowing customers to send cryptocurrency directly to one another across the blockchain, has found that many products and protocols aren’t as hands-off as they allege, CyberScoop stated.
“If they’re not decentralized there are obligations,” Alessio Evangelista, FinCEN associate director, stated during a conference hosted by Chainalysis, the report stated. “They have to comply with the law.”
In some cases, FinCEN has found that the platforms have intervened in user activity, making them liable under anti-money laundering laws, CyberScoop reported.
Frequent Target
“When you ask me to conduct an investigation or have a conversation with one of the protocols and find out whether they have, for example, the capability … or have they ever actually stopped a transaction, in many cases they have,” Evangelista was quoted as saying,
As CyberScoop further reported, the DeFi industry has attracted scrutiny for being a frequent target of hackers. In April U.S. officials tied a hack of more than $600 million from the cryptocurrency bridge Ronin to North Korea’s Lazarus Group. The hack was the largest of a DeFI platform to date.
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