America’s cryptocurrency czar has promised an industry crackdown, regardless of the size of the exchange. In an interview with the Financial Times published on Monday (May 15), Eun Young Choi – head of the Department of Justice’s (DOJ) National Cryptocurrency Enforcement Team (NCET) – said her agency is going after companies that commit crimes or permit them to happen following a “significant” growth in illegal activities in the digital asset area.
“But on top of that, they’re allowing for all the other criminal actors to easily profit from their crimes and cash out in ways that are obviously problematic to us,” Choi added. “And so we hope that by focusing on those types of platforms, we’re going to have a multiplier effect.”
Choi’s NCET was created in 2007. As PYMNTS wrote at the time, her team had been created to investigate the criminal usage of digital assets, including virtual currency exchanges as well as mixing and tumble services, infrastructure providers, and any other entity which facilitates or commits crimes.
Her comments follow a year in which the cryptocurrency sector was rocked by the fall of FTX, which – as the FT report notes – had been seen as a solid presence in a rocky industry. Sam Bankman-Fried, the company’s founder, has been charged with numerous fraud and conspiracy charges, but maintains his innocence.
In addition to FTX, regulators and federal law enforcement have also been targeting Binance, the world’s largest cryptocurrency exchange. For example, the Commodity Futures Trading Commission sued the company for a variety of reasons in March for operating illegally. Binance has said it doesn’t serve American customers.
A prosecution for a crime is not uncommon, as observers have noticed. Binance or its founder Changpeng Zhao could further destabilize the crypto world, but Choi said size is a factor in determining the success of a business. “It is not something that the department will countenance” when weighing possible charges.
If a crypto exchange “has amassed a significant market share in part because they’re flaunting U.S. criminal law,” the government cannot “be in a position where we give someone a pass because they’re saying ‘Well, now we’ve grown too large to fail’,” Choi said, without mentioning any particular firms.
Meanwhile, other federal agencies are also increasing their efforts in crypto enforcement. As PYMNTS wrote earlier in the month, the Securities and Exchange Commission (SEC) – under the leadership of Chairman Gary Gensler – has so far this year handed out 13 enforcement actions, putting it on track for a more than 25% increase over last year’s numbers.
“Along with shifting the focus from individual tokens to trading platforms that cater to U.S. investors, Gensler has separately increased the number of enforcement attorneys in the SEC’s crypto unit – a move that observers say indicates the SEC chair intends to execute further charges in the coming months as his agency casts as wide a net as possible,” PYMNTS wrote.