NCET Director: DOJ Will Crackdown on Crypto Exchanges

Table of Contents

• DOJ Is Actively Investigating Numerous Major Crypto Firms

The director of the DOJ’s National Cryptocurrency Enforcement Team (NCET) said the US is stepping up scrutiny of crypto exchanges.

Eun Young Choi, director of the Department of Justice’s NCET, said the United States is stepping up scrutiny of cryptocurrency exchanges and mixers to target illicit behaviour on the platforms, the Financial Times (FT) reports.

The crypto enforcement tsar told the FT the department would crack down on companies that engage in criminal activity themselves or allow crimes such as money laundering to take place on their platforms.

Choi said:

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. And so we hope that by focusing on those types of platforms, we’re going to have a multiplier effect.

Director Choi further noted with the novel crackdown on cryptocurrency firms, the agency is looking to increase scrutiny to send a “deterrent message” to businesses that have thus far been able to avoid AML and client identification rules.

She added the agency hopes the same message gets across to platforms that do not invest in concrete risk mitigation and compliance procedures.

Choi also told the FT the DOJ would focus on crimes related to DeFi, specifically “chain bridges”, which allow users to exchange different tokens or projects with vulnerable codes.

DOJ Is Actively Investigating Numerous Major Crypto Firms

The department announced in February that it had launched an investigation into Silvergate Capital and its business with defunct crypto exchange FTX and its sister company Alameda Research. Silvergate Capital is the parent company of crypto-focused Silvergate Bank, which saw over two-thirds of its customers withdraw deposits of over $8 billion after FTX collapsed. Silvergate Bank was one of the principal backers of FTX.

Bloomberg reports the DOJ said it would probe into Binance Holdings to investigate whether the platform was used to help Russians outwit US sanctions.

The department also announced last month that it seized $112 million worth of digital assets found to be related to crypto scams. In its crackdown on fraudulent crypto activities, the department confiscated the contents of six crypto wallets believed to have been used to launder the proceeds from several crypto confidence schemes.

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