Department of Justice Signals Its Growing Focus on Cryptocurrency Enforcement

On February 17, 2022, Deputy Attorney General (DAG) Lisa Monaco announced a significant step in advancing its cryptocurrency-related enforcement priorities by naming the first leader of the National Cryptocurrency Enforcement Team (NCET), a team dedicating to investigating and prosecuting cryptocurrency-enabled crimes. The choice of Eun Young Choi, a career prosecutor and former Cybercrime Coordinator of the United States Attorney’s Office for the Southern District of New York, to helm the NCET signals the Department of Justice (DOJ)’s continued commitment to disrupt the criminal misuse of cryptocurrencies and digital assets.

Cryptocurrency is at the center of DOJ’s enforcement regime across various disciplines, including complex financial investigations, cybersecurity, ransomware and data breach attacks, sanctions and export control matters, and anti-money laundering, among others. The appointment of a national enforcement team reflects an effort to innovate how law enforcement investigates cryptocurrency-enabled crimes and to standardize DOJ’s approach to investigations and prosecutions across the country. DOJ’s enforcement efforts will also be bolstered by the formation of a new specialized Federal Bureau of Investigation (FBI) unit focused on tracking and seizing virtual assets used in criminal conduct. Together, these units will enhance cross‑agency and cross-border coordination to address the challenges that arise from increased usage of cryptocurrency and growing threats to potential victims.

The Broader Context for the Announcement

These announcements build on DOJ pronouncements and actions over the past several months that reflect its growing focus on cyber- and cryptocurrency-enabled crimes:

• First, on October 5, 2021, Principal Associate Deputy Attorney General John P. Carlin addressed the future of DOJ corporate enforcement and its heightened focus on sanctions and export control-related actions, stressing DOJ’s efforts to use such actions to disrupt the ecosystem that facilities ransomware activity and allowed cryptocurrencies to become a currency of choice for criminals.
• The next day, on October 6, 2021, DAG Lisa Monaco announced a new Civil Cyber‑Fraud Initiative intended to leverage the False Claims Act to pursue cybersecurity‑related fraud and the NCET to focus on cryptocurrency-enabled crimes. 
• Later that month, DAG Monaco issued a DOJ memorandum and delivered remarks on October 28, 2021 to emphasize DOJ’s continued focus on white collar crime enforcement, to introduce three changes to DOJ policy, and to announce the creation of a Corporate Crime Advisory Group.

The Implications for Cryptocurrency Enforcement

Director Choi has nearly a decade of experience investigating and prosecuting cybercrime, and is also a member of the Department’s Ransomware and Digital Extortion Task Force, which has sought to bring to bear the full spectrum of enforcement tools and resources of DOJ in confronting the growing ransomware threat. Director Choi’s appointment shows that DOJ recognizes the role that cryptocurrency has grown to play in ransomware and extortion schemes, trafficking in narcotics, hacking tools, and other contraband, and money laundering.

DOJ also announced that the NCET will work closely with the newly established Virtual Asset Exploitation Unit (VAXU) within the FBI. The VAXU, in conjunction with NCET and other law enforcement partners, will focus on tracking and seizing digital assets involved in criminal offenses. Further, recognizing that cybersecurity and cryptocurrency know no geographic boundaries, the NCET and VAXU will also be tasked with coordinating with foreign partners, other regulatory bodies, and private industry in the regulation of digital assets. NCET and VAXU are among the first units established to focus on cryptocurrency-enabled crime. The creation of specialized units is a trend we expect to continue among other law enforcement agencies that see an increasing nexus between cryptocurrency and crimes under their jurisdiction, including the Treasury Department, Department of Homeland Security, and Securities Exchange Commission, which was quick to initiate cryptocurrency enforcement efforts through its focus on decentralization and a series of actions in early August 2021.

As DOJ establishes the strategic priorities for and continues to add resources to support the NCET and VAXU, we expect significant additional enforcement activity in this area. DOJ has emphasized the importance of “following the money” in its investigations – no matter what form that “money” takes. For example, DOJ’s recent seizure of more than $3.6 billion in digital assets reflects law enforcement’s focus on tracing cryptocurrency proceeds, an action that DAG Monaco described as being aided by prosecutors on the NCET. Further, the Department’s continued outreach to the private sector underscores their efforts to gain the cooperation of companies and financial institutions.   

The development of these specialized units within DOJ and FBI signals what we can expect from other agencies in the coming months and years, as they evolve to respond to criminals’ novel, illicit uses of cryptocurrencies and other digital assets.