On October 6, 2021, the U.S. Department of Justice (“DOJ”) announced the creation of a National Cryptocurrency Enforcement Team (“NCET” or “Team”) to tackle investigations and prosecutions of criminal misuses of cryptocurrency, including crimes committed by virtual currency exchanges, mixing and tumbling services, and money laundering actors. The DOJ’s announcement came on the same day that it launched its Civil Cyber-Fraud Initiative, which is geared toward “emerging cyber threats” that target “sensitive information and critical systems.” The creation of the NCET also comes on the heels of continued expressions of concern and an intent to ramp up the regulation of digital assets by the U.S. Securities and Exchange Commission (“SEC”) and its Chair, Gary Gensler.
Similar to recent comments by the SEC Chair, the DOJ announcement displayed a focus on cryptocurrency exchanges, noting that the NCET will seek to root out abuse on cryptocurrency platforms in an effort to promote and ensure user confidence. The NCET will also focus on prosecuting criminal activity involving the use of cryptocurrencies “from being the primary demand mechanism for ransomware payments, to money laundering and the operation of illegal or unregistered money services businesses, to being the preferred means of exchange on ‘dark markets’ ....” The DOJ’s press release announcing the NCET also notes the Team’s commitment to trace and recover assets lost in criminal schemes involving cryptocurrencies.
Building on the Department’s Existing Capabilities
The Team, which will be supervised by Assistant Attorney General Kenneth A. Polite Jr., plans to draw team members from various divisions within the DOJ who possess knowledge in financial systems, blockchain technology, tracing transactions, and applicable criminal statutes. The NCET will be informed by the DOJ’s Cryptocurrency Enforcement Framework and will seek to utilize...