Last month, the United States Department of Justice announced the creation of a National Cryptocurrency Enforcement Team, or NCET, to combat cryptocurrency-related crime.

The NCET will tackle investigations and prosecutions of criminal misuses of cryptocurrency, including crimes committed by virtual currency exchanges, mixing and tumbling services— which obscure a cryptocurrency fund’s original source by mixing it with other funds—and money launderers. The team will improve upon the DOJ’s current investigative capabilities and draw expertise from the DOJ Criminal Division’s sections, including the Money Laundering and Asset Recovery section, or MLARS, and Computer Crime and Intellectual Property section. 

“We are launching the [NCET] to draw on the Department’s cyber and money laundering expertise to strengthen our capacity to dismantle the financial entities that enable criminal actors to flourish — and quite frankly to profit — from abusing cryptocurrency platforms,” said Deputy Attorney General Lisa Monaco in a DOJ press statement. “As the technology advances, so too must the Department evolve with it so that we’re poised to root out abuse on these platforms and ensure user confidence in these systems.”

Cryptocurrency and Crime

Cryptocurrency appeals to criminals because it facilitates digital payments without the regulation of financial intermediaries. 

According to Monaco’s statement, cryptocurrency is used in a “wide variety of criminal activity.” This includes ransomware attacks—where a user’s computer system is corrupted with malicious software until a ransom is paid—money laundering and the operation of illegal or unregistered money service businesses. It can also be used in the purchases of illegal drugs, weapons, malware and other hacking tools.

The DOJ has been involved in cryptocurrency-related cases in the past. For instance, this year the DOJ sentenced the owner of cryptocurrency exchange RG Coins for money laundering and seized $2.3 million in cryptocurrency from the extortionist group DarkSide. Last year, the DOJ charged offshore cryptocurrency exchange BitMEX for failing to implement an adequate anti-money laundering program. 

But for the first time, the DOJ will have a specialized unit to tackle such crimes.

The National Cryptocurrency Enforcement Team

NCET’s initiation comes as other agencies under the Biden administration are beginning to prioritize cryptocurrency regulation. The DOJ’s creation of NCET was announced immediately after SEC Chair Gary Gensler described the cryptocurrency asset class as “rife with fraud, scams, and abuses.”

According to Monaco’s statement, the NCET builds upon MLARS’s Digital Currency Initiative and takes inspiration from the DOJ’s 2020 Cryptocurrency Enforcement Framework. Because of the widespread nature of cryptocurrency-related crime, the NCET’s purview will include existing and future cases in the DOJ’s Criminal Division and in U.S. Attorneys’ Offices across the country. The NCET’s influence will also extend to supporting “international, federal, state, local, tribal, and territorial law enforcement authorities.”

The NCET will draw team members from the DOJ’s money laundering, intellectual property and computer crimes divisions, as well as from US attorneys’ offices across the country. These members will combine their expertise collaboratively under a team leader.

The DOJ is currently seeking a head for the NCET through an application process.

ABOUT THE WRITER

Freya Savla is a Tech Innovation Fellow from Yale University, where she is exploring the political economy and the public sphere through the lens of economics, policy and journalism.

Contact Freya at freya@identityreview.com.

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