US Department of Justice Calls on New Cryptocurrency Czar | Crypto News

The Justice Department has appointed a veteran cybersecurity prosecutor to lead a new team dedicated to investigating and prosecuting illicit cryptocurrency schemes by cybercriminals and nation states, including North Korea and the United States. Iran.

Eun Young Choi will serve as the first director of the National Cryptocurrency Enforcement Team, which will serve as a focal point for efforts to identify and dismantle the misuse of cryptocurrencies and other digital assets, it announced Thursday. Deputy Attorney General Lisa Monaco.

“If we want to see – as I think we will – cryptocurrency grow in popularity and be adopted more widely, we need to make sure that the ecosystem they operate in is trustworthy and, frankly, can be controlled. Monaco said in an interview. “We’re going to do our best to sue them, get those profits back and make them realize they can’t hide.”

The $2 trillion cryptocurrency market has exploded as companies and investors seek to reap higher returns and gain a foothold in technology considered still in its infancy.

Prosecutors and regulators are racing to figure out how to control this space – along with the market for other digital assets such as non-fungible tokens – which has become a new frontier for criminals and rogue nations to steal and launder billions of dollars. through anonymous channels like blockchain. transactions, encryption and digital wallets.

Illicit transactions jumped nearly 80% to $14 billion, an all-time high, in 2021, according to blockchain analytics firm Chainalysis. Still, crime accounted for a much smaller share of total crypto trading volume, which has grown significantly over the past year, the company said.

One of the main goals of the new team will be to eradicate illegal activities on virtual currency exchanges as well as cryptocurrency tumbler or mixing services, which are used to hide contaminated funds, Choi said in an interview.

Known among her colleagues as “EYC”, Choi most recently served as Monaco’s senior adviser on cybersecurity issues. The crypto team is housed within the department’s criminal division and has more than a dozen experienced prosecutors who plan to hire more staff.

“We’re trying to centralize so that we’re a one-stop shop of all subject matter experts within the department,” said Choi, 41.

When the creation of the crypto team was announced in October, Monaco said a key goal would be to take legal action against cryptocurrency exchanges and other entities that break the law and aid the movement of illicit financing. The team would add support to current probes while pursuing new ones.

Although Choi did not identify any exchange by name, Bloomberg News previously reported that the Department of Justice and the Internal Revenue Service are investigating whether Binance Holdings Ltd., the world’s largest crypto trading platform, is a conduit for money laundering and tax evasion.

Choi said his team caters to crypto companies that have strong anti-money laundering policies and strong compliance programs, as well as blockchain analytics companies.

“The information they hold is crucial to stamping out the abuse of cryptocurrencies because they are the ones who can see suspicious activity in their own systems that may be occurring,” she said.

In a sign of the scale of the challenge facing US law enforcement, the Justice Department this month seized a bitcoin worth around $3.6 billion that was stolen during a a 2016 hack, the largest financial seizure ever. Additionally, the US Marshals Service – which is the primary custodian of seized assets for the department – ​​was in possession of $919 million in 22 different cryptocurrencies at the end of 2021.

Experienced Prosecutor

Choi’s appointment comes after years spent chasing hacks and crypto attacks.

In one of her first major cases, she led the successful 2014 hacking suit against JPMorgan Chase & Co., which saw hundreds of millions of dollars stolen by hackers and conspirators in more than a dozen of country. She also argued the appeal in the case against Ross Ulbricht, the founder and chief administrator of the now closed Silk Road underground virtual drug bazaar.

“What his appointment shows is that cryptocurrency is truly at the intersection of complex financial investigations, cybersecurity, anti-money laundering, drug trafficking and cross-border law enforcement. “, said Edward Imperatore, who was a colleague of Choi in the cybercrime unit of the United States Attorney’s Office in Manhattan. “She has experience in each of those areas.”

As cryptocurrencies become more mainstream, the potential for wrongdoing has grown exponentially. Crypto fraud now affects a wide range of activities, including financial crimes, corruption, narcotics deals, ransomware attacks, hacking attacks, money laundering, terrorist financing and sanctions evasion , Choi said.

Choi’s team will lead the department’s efforts to coordinate with U.S. and international law enforcement agencies, regulators and private industry. It will also enhance the criminal division’s existing efforts to provide support and training to federal, state, local and international law enforcement agencies.

The Federal Bureau of Investigation also plans to announce the creation of a new Virtual Assets Operating Unit on Thursday.

“It will be important for us to have a united front to try to figure out what tools and authorities we all bring to this approach on digital assets,” Choi said.

There are, however, tensions between private companies dealing with crypto and what the department does.

Companies are concerned that justice and regulatory agencies are taking a heavy-handed approach to enforcement, according to a former federal prosecutor who asked to remain anonymous when speaking about the relationship between private companies and the department.

US agencies have struggled for years to get companies to disclose hacking attacks and cyber vulnerabilities. These private sector victims feared that such reports would put them in the crosshairs of prosecutors or that there would be a regulatory backlash. But US officials have expressed hope that they have turned a corner in recent years, particularly through successful efforts to help companies recover stolen funds.

In addition to this month’s bitcoin seizure in the Bitfinex hack case, last year the US recouped almost all of the bitcoin ransom money paid to perpetrators of a cyberattack on Colonial Pipeline Co. .which triggered a fuel shortage along the US East Coast.

(Updates with comment from former colleague in 17th paragraph)

–With help from Allyson Versprille, Tom Schoenberg and Christian Berthelsen.

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