US government wants to take action against cryptocurrencies: The Department of Justice’s new enforcement framework shows how the authorities want to prevent the misuse of cryptocurrencies by criminals and terrorists.
The US Department of Justice (DoJ) has presented the Cryptocurrency Enforcement Framework. The report builds on the efforts of the Attorney General’s Cyber-Digital Taskforce tasked with investigating “emerging threats and enforcement challenges associated with the increased proliferation and use of cryptocurrency,” the ministry said.
The document outlines the Department of Justice and law enforcement response strategies to blockchain and cryptocurrency crimes. The 83-page framework document, which is divided into three main sections, first outlines the possible uses of blockchain and cryptocurrencies, ranging from intelligent contracts, wallets, initial coin offerings (ICOs), and the exchange of virtual coins itself.
The US govenment report then examines today’s “illegal” uses of cryptocurrencies and divides them into three categories: financial transactions related to the commission of crimes; Money laundering and the shielding of legitimate activities from tax, reporting, or other legal requirements; and direct crime including theft.
In particular, the framework states that cryptocurrencies can be associated with organized crime and terrorist activities.
“You can avoid large cash transactions and reduce the risk of bank accounts being traced or banks notifying governments of suspicious activity,” the report said. “Criminals have used cryptocurrency, often in large quantities and across international borders, as a new means of financing criminal behavior, ranging from child exploitation to fundraising for terrorists. Cryptocurrency has also been used to pay for illegal drugs, firearms, and tools for cyber crime and to facilitate sophisticated ransom and extortion campaigns.”
Examples cited in the document include using fundraising platforms and encouraging donors on social media to donate crypto money to terrorist groups such as ISIS, a practice that US prosecutors often describe as “material support” to a criminal or terrorist organization.
The second section of the report outlines the legal and regulatory tools currently in use against the criminal crypto activity. This includes the wide range of charges that can be brought against a suspect – such as wire transfer fraud, securities fraud, money laundering, computer intrusion, and running an unlicensed money transfer business – as well as the power to seize virtual assets and the ability to the website – Confiscate domains.
The US Treasury Department’s Office of Foreign Assets Control (OFAC) also recently issued guidelines for companies to prevent ransom extortion claims from being paid out, as such activities could violate US sanctions.
Finally, the report outlines the current and future challenges that the criminal use of cryptocurrencies poses for regulators and law enforcement agencies. Cryptocurrencies and peer-to-peer exchanges, for example, should have an obligation to support law enforcement authorities in their investigations.
“Given their potential to facilitate criminal activity, these institutions have an increased responsibility to protect their platforms and businesses from exploitation by nefarious actors and to ensure that customer data is protected and secured,” said the task force.
Bitcoin ATMs, cryptocurrency casinos are also named as legitimate businesses that can be exploited for criminal profits.
“Cryptocurrencies and distributed ledger technology hold tremendous promise for the future, but it is critical that these important innovations comply with the law,” commented Task Force member Brian Rabbitt. “The Cryptocurrency Enforcement Framework provides the public with vital information to help them understand and meet their obligations under the legal regulations governing these new and rapidly evolving technologies.”
