On October 6, the U.S. Department of Justice (DOJ) announced the creation of a specialized unit, the National Cryptocurrency Enforcement Team (NCET), charged with tracking down criminal misuse of digital assets and crypto infrastructure, as well as tracking and restoring the illegally acquired cryptocurrency.

The move continues the push by US authorities to disrupt corners of the crypto ecosystem that are believed to facilitate illegal activities such as ransomware attacks. What does the rise in government crypto enforcement hold in store for the larger area of ​​digital assets?

Bundling of crypto expertise

The new unit will operate on the principles formulated almost exactly a year ago in the DOJ’s Cryptocurrency Enforcement Framework. On the one hand, the document affirms the Department’s extensive responsibility for criminal activities that affect the financial or data storage infrastructure in the United States.

In addition to investigating its own cases and supporting the efforts of US attorneys across the country, NCET will encourage collaboration among all relevant federal, state and local law enforcement agencies in the fight against cryptocurrency crime. The team is also charged with training and advising law enforcement officers on crypto-related matters and developing investigative strategies.

The new task force will come from both the Money Laundering and Asset Recovery and Cybercrime and Intellectual Property Divisions of the DOJ, as well as a number of US attorneys.

Speaking to Cointelegraph, Kevin Feldis, a partner at law firm Perkins Coie, described both MLARS and CCIPS as “highly respected components of the Department of Justice” whose members are “well versed in conducting cross-border investigations and coordinating with law enforcement agencies.” the globe.”

New tool for existing guidelines

The NCET is expected to direct its enforcement efforts towards illegal or unregistered money services, ransomware payment infrastructures, and various other marketplaces where digital money encounters criminal activity. None of this is particularly new, and the DOJ is simply putting together a leaner, more coordinated mechanism to fight cybercrime and potentially recover stolen funds.

The announcement also expands the range of developments that illustrate the Biden government’s commitment to an assertion-driven stance on cybercrime, including criminal activity enabled by crypto.

Jackson Mueller, Director of Policy & Government Affairs at digital asset firm Securrency, commented on Cointelegraph:

This announcement should come as no surprise to those of us pursuing the Biden administration and its efforts, whether through federal financial regulators, the Treasury Department, the President’s Working Group on Stablecoins, and others, to seek greater scrutiny and enforcement against the broader ecosystem.

Mueller added that the advent of NCET signals the government’s preference for more enforcement-oriented policies, rather than the focus on engagement and collaboration that many in the industry would prefer.

Michael Bahar, chairman of the cybersecurity practice at global law firm Eversheds Sutherland, traces the roots of the NCET initiative to Joe Biden’s May 2021 ordinance, which made it a top priority to bring the full range of federal government agencies and resources to life bring the country’s computer systems to protect against cyber attacks. Bahar further commented:

As part of this nationwide effort, the U.S. Department of Justice is leveraging its decades of money tracking and money laundering extermination to both catch the perpetrators and return the money, as well as undermining financial incentives for criminals to launch ransomware attacks in the first place .

Ron Brisé, government affairs and lobbying attorney at Gunster law firm, said the DOJ “is connecting the dots across all of its sections to put a more central focus on cryptocurrency-related investigations and law enforcement.” Brisé added that it wouldn’t surprise him if certain individual states replicate the federal initiative and deploy their own teams to enforce cryptocurrencies in the near future.

Broader impact

Granted, weeding out bad actors in the cryptocurrency sector who are getting a bad name for the entire industry in the eyes of the public (and often in the eyes of policymakers) is a noble endeavor. However, there is also room for legitimate concern for those crypto players who act in good faith and invest significant resources in compliance – that is, the overwhelming majority of industry participants.

It is not difficult to imagine a scenario in which overly aggressive enforcement could put an additional burden on legitimate actors.

Kevin Feldis of Perkins Coie believes the DOJ’s focus on stepping up criminal investigations and building capacity to recover illicit crypto proceeds is also likely to mean stronger government scrutiny across the industry. Feldis added:

The legal and regulatory landscape is still evolving, and investing in compliance and being a good crypto corporate citizen is likely to serve industry players well given this increased focus on government enforcement by the DOJ, SEC, and others.

At the same time, an expert enforcement proficient enough to filter out criminals without unduly burdening the good guys could be a boon to the industry. Having all of the DOJ’s most crypto-savvy people in a well-coordinated force could also lead NCET to deliberately exercise its enforcement powers.

Gunster’s Ron Brisé notes that the emergence of a specialized crypto unit within the Justice Department could be viewed as beneficial overall. He commented:

From a larger perspective, consumer and crypto business confidence will rise as those whose digital funds are stolen can take recourse.

If the NCET lives up to its stated mission, instead of casting unnecessarily wide nets, the crypto room will become a safer place for legitimate financial activity.

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