WASHINGTON–The federal government is significantly beefing up its enforcement around digital assets and crypto.
The Justice Department reported it has turned 150 federal prosecutors nationally into what are essentially crypto cops. The new network, announced Friday, includes fraud, tax, environment and other specialists, along with related technical experts, according to the director of crypto enforcement, Eun Young Choi. “One thing that really stood out to us about digital asset crime is that, unlike other cases, these are really multidisciplinary and international,” she told the New York Times.
According to the government, illegal markets for drugs, child sexual abuse material, firearms, fake and stolen information, and hacking are “a significant focus” of the department’s efforts. Crypto use has grown to billions annually on the Darknet, Choi told the Times.
Focus on DeFi
In addition, the report noted new unregulated markets, like decentralized finance, or DeFi, platforms, have popped up in more accessible areas of the Internet that also pose investor risks and consumer protection issues. DeFi has also generated significant discussion within credit unions over the threats it poses to their traditional business model.
“DeFi is an area of particular concern,” Choi told the Times. Potentially complicating the department’s efforts is the fact that DeFi is still loosely defined, particularly as it pertains to what makes these platforms or products decentralized. DeFi champions often say that code, and not humans, are in control of these platforms, and therefore developers should be mostly out of police reach. Choi disagrees. “Code is like any other tool. There is a person behind it.”
The New Abbreviation: DACN
In announcing its new initiative, the Justice Department said it has launched a “Digital Assets Coordinators Network.”
“Led by the NCET, in close coordination with the Criminal Division’s Computer Crime and Intellectual Property Section and the Money Laundering and Asset Recovery Section’s Digital Currency Initiative, the DAC Network is composed of designated federal prosecutors from U.S. Attorneys’ Offices nationwide and the department’s litigating components,” the department said. “Each DAC will act as their office’s subject-matter expert on digital assets, serving as a first-line source of information and guidance about legal and technical matters related to these technologies.
“As members of the DAC Network, prosecutors will learn about the application of existing authorities and laws to digital assets and best practices for investigating digital assets-related crimes, including for drafting search and seizure warrants, restraining orders, criminal and civil forfeiture actions, indictments, and other pleadings,” the government statement continued. “The DAC Network will also serve as a source of information and discussion addressing new digital asset issues, such as DeFi, smart contracts, and token-based platforms, and their use in criminal activity. The DAC Network will likewise raise awareness of the unique international considerations of the crypto ecosystem, including the benefits of leveraging foreign relationships and the challenges of cross-border digital asset investigations.”