US DoJ Goes After Rogue Exchanges As Crypto Crimes Grow ‘Significantly’

Eun Young Choi, the first director of the National Cryptocurrency Enforcement Team (NCET), has told reporters that crypto-related crimes have risen significantly in recent years. Through her team, the United States Department of Justice (DoJ) now plans to go after rogue exchanges that knowingly allow criminals to launder money.

The Financial Times reports that Choi is concerned about the spike in crypto-enabled crimes and is setting their eyes on cryptocurrency exchanges, mixers, and tumblers. 

Open-source token mixers such as Tornado Cash, a protocol that United States authorities have already sanctioned, are widely used by criminals to launder stolen assets. Because they make it hard for authorities to trace transactions on public ledgers, hackers are actively exploiting these tools to obfuscate transactions and evade justice.

NCET and the DoJ will go after crypto companies that, though compliant with existing laws on paper, have allowed themselves to be used by criminals; a development that Choi says is “problematic”.

By targeting these rogue agents, the director said they would send a “deterrent message” and hope their involvement would have a multiplier effect. 

Specifically, NCET seems to have a problem with cryptocurrency exchanges that skirt anti-money laundering rules and those which don’t comply with know-your-customer (KYC) laws. The enforcement team says going after them could make them invest more in risk-mitigation procedures and comply more with existing rules.

Binance, the world’s largest cryptocurrency exchange, is reportedly one of the exchanges on the radar of the DoJ. Unconfirmed reports suggest that the DoJ, among other agencies, including the United States Securities and Exchange Commission (SEC), is investigating the Changpeng Zhao-led exchange for violating established rules.

President Joe Biden’s administration has taken a relatively tough stance on cryptocurrencies. Regulators in the United States have been in recent months going after companies they deem to be non-compliant, especially after the collapse of FTX, a cryptocurrency exchange.

The position adopted in the United States, especially on regulation and enforcement, could be one of the strictest in the world. Several officials and policymakers in the country strongly believe cryptocurrencies can pose a significant risk to the stability of their financial infrastructure, which could also impact national security.

In that regard, steps have been taken to increase oversight and, most importantly, double down on regulation of the cryptocurrency scene.

NCET, of which Choi is the first director, was created in October 2021. A department under the DoJ, the team goes after entities, including individuals that misuse digital assets, flout established anti-money laundering rules, or engage in ransomware attacks using cryptocurrencies.