U.S. Government Attorneys To Target Individuals And Guardians For Crypto Lawsuits


A group of senior U.S. government lawyers have set their priorities for the enforcement and prosecution of individuals and businesses who have committed crypto-related crimes.

Law enforcement officials from the US Department of Justice (DoJ), the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) spoke about the direction their agencies will take at a panel discussion at the American Bar Association’s annual institute on white-collar crime in Miami on October 27.

In addition to corporate actors, lawmakers are taking a closer look at individuals according to an event report by Law360. The Senior Assistant Deputy Attorney General of the Justice Department’s Criminal Division, Nicholas McQuaid, has said prosecuting individuals in white-collar cases is a top priority.

He added that the department was expanding its use of data-driven probes in such cryptocurrency-related cases. The DoJ is forming a specialized group within the FBI to work with its fraud section to help with investigations and prosecutions.

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SEC Director of Enforcement Gurbir Grewal commented on the agency’s extensive review of unregistered and fraudulent Initial Coin Offerings (ICOs), unregistered crypto exchanges, and crypto lending and reward programs . He said “we will make sure these players and actors play by the rules”, before adding:

“That’s why we’re going to take a close look at gatekeepers like auditors and audit firms, lawyers and underwriters. “

In early September, the SEC threatened legal action against Coinbase for its stable return program, Lend. Coinbase has since abandoned plans to launch the service.

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The SEC also targeted Terraform Labs CEO Do Kwon with a subpoena in September. Being a resident of South Korea, Kwon challenged it on the grounds that the regulator lacked jurisdiction.

In October 2020, the DoJ filed criminal charges against four BitMEX executives for illegally operating a derivatives exchange, the trial was set for March 2022.

Related: Regulatory and privacy concerns follow SEC threat to Coinbase

CFTC Acting Director of Enforcement Vincent McGonagle said he was also concerned about digital assets and the decentralized finance (DeFi) sector. He noted that the crypto asset space may not be the only component of illegal activity, as other factors may be involved, such as forex:

“In the area of ​​digital assets, we have brought several lawsuits against entities where they offer digital assets, Bitcoin or otherwise on a margin or funding basis.”

Government agencies are clearly stepping up their activities against crypto companies and individuals.

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In mid-August, lawmakers urged the SEC and CFTC to form a joint crypto asset task force so they can determine how to “effectively use their current jurisdiction cooperatively.” In late September, the CFTC indicted 12 New York crypto options firms for not registering.

On October 18, the New York attorney general’s office ordered cryptocurrency lenders to cease operations. The Celsius crypto lending platform said it was not one of the two, but rather worked with regulators in New York.