The emergence of digital assets has brought new risks and challenges, including the potential exploitation of the technology to facilitate financial crime.
The U.S. Department of Justice has committed to work with its law enforcement and regulatory partners to "[advance] the responsible development of digital assets, protecting the public from criminal actors in this ecosystem, and meeting the unique challenges these technologies pose."1
On the heels of Executive Order No. 14067 on responsibly developing digital assets,2 the DOJ broadcast a series of new initiatives in furtherance of these efforts.3
Of note, on Sept. 16, 2022, the DOJ announced the creation of the Digital Asset Coordinator, or DAC, Network — a network of more than 150 prosecutors from U.S. attorney's offices and the DOJ's litigating components — which "will serve as the department's primary forum for prosecutors to obtain and disseminate specialized training, technical expertise, and guidance about the investigation and prosecution of digital asset crimes."4
These additional resources and specialized training will likely result in a greater number of DOJ investigations, so crypto market participants should understand both how the tools of the DOJ vary from those of its regulatory partners, as well as the theories of liability that the DOJ may pursue alongside those partners in parallel actions.
As the BitMEX case and other recent cases discussed below demonstrate, crypto entities or individuals at the helm of those entities can be subject to legal action on multiple legal theories and jurisdictional bases.
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Originally published by Law360 on the 6th of January, 2023.
Footnotes
1. Press Release, Dep't of Justice, Off. of Pub. Affairs, Justice Department Announces Report on Digital Assets and Launches Nationwide Network (Sept. 16, 2022), https://www.justice.gov/opa/pr/justice-department-announces-report-digital-assets-and-launches-nationwide-network.
2. Executive Order on Ensuring Responsible Development of Digital Assets, The White House (Mar. 9, 2022), https://www.whitehouse.gov/briefing-room/presidential-actions/2022/03/09/executive-order-on-ensuring-responsible-development-of-digital-assets/.
3. Press Release, Dep't of Justice, Off. of Pub. Affairs, Justice Department Announces Report on Digital Assets and Launches Nationwide Network (Sept. 16, 2022), https://www.justice.gov/opa/pr/justice-department-announces-report-digital-assets-and-launches-nationwide-network.
4. Id.
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