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News/US DOJ Targets Crypto Exchanges in Effort to Combat Illicit Activities

US DOJ Targets Crypto Exchanges in Effort to Combat Illicit Activities

May 15 2023

last year3 minutes read

NCET promises crackdown on trading platforms that enable criminal actors to profit from their crimes

Written by Kasper

The U.S. Department of Justice's (DOJ) National Cryptocurrency Enforcement Team (NCET) has vowed to take strong action against crypto exchanges that facilitate illicit activities. According to the Financial Times, the DOJ's head of crypto enforcement, Eun Young Choi, has emphasized the department's determination to target exchanges that allow criminal actors to profit from their crimes and cash out. This crackdown comes as crypto crime has grown significantly over the past four years, with billions lost to investment fraud in 2022 alone.

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Tackling Non-compliant Crypto Exchanges

Choi explained that the DOJ is particularly focused on businesses that do not follow anti-money laundering (AML) or know-your-customer (KYC) regulations, or those that neglect comprehensive compliance and risk mitigation efforts. By concentrating on these types of platforms, the NCET aims to create a "multiplier effect" that will ultimately protect investors and deter criminal activities.

The NCET's mission is not only to fight existing crypto crimes but also to proactively prevent new ones from emerging. By taking decisive action against non-compliant exchanges, the DOJ hopes to send a clear message to the crypto industry that sidestepping regulations will not be tolerated.


Addressing "Pig Butchering" Investment Scams

In addition to targeting non-compliant exchanges, the NCET also plans to bring more enforcement actions against investment scams, which Choi refers to as "pig butchering" schemes. Originating from a Chinese phrase that means fattening pigs for slaughter, these scams involve perpetrators building relationships with victims over several months before defrauding them.

The NCET has already made significant strides in this area, announcing last month that it had dismantled six such scams, totaling around $112 million. However, the scale of the problem remains immense. The Federal Bureau of Investigation (FBI) estimates that in 2022, $3.31 billion was stolen through investment fraud, with crypto-related scams accounting for over $2.5 billion of that figure.

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The Bigger Picture

The DOJ's crackdown on crypto exchanges and investment scams comes as governments worldwide are grappling with the challenges posed by the rapid growth of the cryptocurrency industry. With digital currencies gaining mainstream acceptance and adoption, the need for effective regulation and enforcement has become increasingly urgent.

The DOJ's efforts to combat illicit activities in the crypto space are part of a broader push by regulators and law enforcement agencies to protect investors and maintain the integrity of financial markets. The crackdown is also a response to the growing recognition that cryptocurrencies, while holding great potential for economic innovation, can also be exploited by bad actors.


Conclusion

As the cryptocurrency landscape continues to evolve, it is crucial for governments and regulatory agencies like the DOJ to stay ahead of the curve in addressing the risks and challenges posed by this rapidly growing industry. The recent crackdown on non-compliant crypto exchanges and "pig butchering" investment scams is a step in the right direction, demonstrating the DOJ's commitment to safeguarding the interests of investors and maintaining the stability and integrity of the financial system.

The actions taken by the DOJ's National Cryptocurrency Enforcement Team serve as a reminder that the crypto industry must prioritize compliance and transparency in order to thrive. As governments and regulators continue to clamp down on illicit activities, the onus is on legitimate crypto businesses to demonstrate their commitment to upholding the highest standards of ethics and accountability.


FAQ About DOJ Crackdown on Exchanges

How does the DOJ's crackdown on crypto exchanges fit into the broader regulatory landscape? 

The DOJ's efforts are part of a larger push by regulators and law enforcement agencies to protect investors and maintain the integrity of financial markets in response to the rapid growth of the cryptocurrency industry.

What is the main focus of the US DOJ's crackdown on crypto exchanges?

The DOJ is targeting crypto exchanges that facilitate illicit activities by not complying with anti-money laundering (AML) or know-your-customer (KYC) regulations, or neglecting comprehensive compliance and risk mitigation efforts.

What are "pig butchering" investment scams?

"Pig butchering" is a term originating from a Chinese phrase that refers to fattening pigs for slaughter. In the context of investment scams, it involves perpetrators building relationships with victims over several months before defrauding them.

This article has been refined and enhanced by ChatGPT.

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