- Exchanges acting illegally or allowing illegal activity are being targeted.
- The DOJ wants to clear the criminals out of crypto.
- All exchanges, regardless of size, are in the firing line.
The U.S. continues to be a hostile regulatory environment for cryptocurrency exchanges and companies, with the Department of Justice (DOJ) now stating it is stepping up its own crackdown in the space.
Eun Young Choi, director of the DDOJโs national cryptocurrency enforcement team, told the Financial Times that her squad is targeting crypto exchanges and the โmixers and tumblersโ to try and stamp out illegal activities.
Are Exchanges in the Firing Line?
While it may be assumed that U.S. agencies are already targeting exchanges given the SECโs moves against crypto, the DOJโs mandate is to stamp out crypto crime.
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The DOJ believes that exchanges and other companies are committing crypto crimes but also those โ allowing for all the other criminal actors to easily profit from their crimes and cash out, Choi told the Financial Times.
Choi added, “We hope that by focusing on those types of platforms, weโre going to have a multiplier effect.โ
Focusing on direct crimes and crimes committed on platforms will put exchanges and other services in a compromising position. Many exchanges already have safeguards to stop illegal crypto use cases. However, it is less prominent on mixers and tumblers.
Will the Crackdown Help the Crypto Industry?
The U.S. emerged as one of the jurisdictions with the toughest stance on crypto worldwide. This positioning is intended to safeguard users, but many argue it stifles innovation. However, the DOJ also says it focuses on thefts and hacks involving decentralized finance (DeFi).
Choi highlighted chain bridges as a particular area the team is looking into. This comes after the DOJ charged a man for defrauding DeFi platform Mango Markets of crypto worth $110 million.
The motives for the crackdown appear to be in the right place. However, the execution by U.S. agencies continues to be โregulation by enforcement,โ making it hard for companies to know where the lines for compliance are.
Will the DOJ Bring Down Binance?
The U.S. is already moving towards prosecuting the worldโs biggest exchange, Binance, after the CFTC charged the exchange for operating illegally in the country. Without referring to any specific company, Choi does not appear to be perturbed by size.
She said a companyโs size โis not something that the department will countenanceโ while looking at potential charges.
If a company โhas amassed a significant market share in part because theyโre [avoiding] US criminal law, the DoJ cannot be in a position where we give someone a pass because theyโre saying โWell, now weโve grown to be too big to fail,โ โChoi said.
Read more about the CFTCโs case against Binance:
Binance Lawsuit: CFTC Chief Doubles Down on Accusations Against Exchange
Read more about OpenAI CEO and his crypto project Worldcoin: