Although the advent of cryptocurrency has many advantages for an increasingly digital economy, it is not without its perils. The central features of cryptocurrency – decentralized operation and control and high degrees of anonymity – make the technology attractive to bad actors and present unique challenges to law enforcement. The Department of Justice (“DOJ”) Cyber-Digital Task Force recently released its Cryptocurrency Enforcement Framework (“Framework”), which provides a comprehensive overview of emerging threats due to the increasing use of cryptocurrency and outlines the DOJ’s response strategies.
Attorney General William Barr has stated that ensuring the use of cryptocurrency “is safe and does not imperil our public safety or our national security is vitally important to America and its allies.” The Framework is intended to inform the public of the ways in which legitimate technologies can be used for improper purposes (e.g., fundraising for terrorism, ransom, extortion, blackmail, money laundering, and trading in illegal goods like guns or drugs) and how to comply with the laws governing this technology. The report notes that the DOJ has prosecuted malfeasance and illegal uses of cryptocurrency under a number of federal laws that have been adapted to this emerging technology. The Framework also highlights DOJ’s cooperation with international and domestic partners including the Securities and Exchange Commission, the Commodities Future Commission, and agencies within the Department of Treasury. Each of these agencies has monitored threats and created enforcement mechanisms to crack down on use of cryptocurrency for illegal purposes. For example, the Treasury Department’s Office of Foreign Assets Control’s recently advised that companies that facilitate ransom payments on behalf of ransomware victims may be subject to steep monetary penalties. Read Chilivis Grubman’s post about the advisory here. As this technology becomes more widely used, a comprehensive and coordinated enforcement approach will be necessary.
As digital currency becomes more ubiquitous, so too will the legal regulations that accompany such technology. It behooves everyone to be aware of such threats and how seemingly innocent behavior could run afoul of federal law. The attorneys at Chilivis Grubman represent clients of all sizes in connection with government investigations and enforcement actions. If you need assistance with such a matter, please contact us today.