Justice Department Seeks Faster Crypto Investigations

Not only does the U.S. Department of Justice want crypto criminals who violate money transmitter licensing laws to spend more time in jail, but it also wants to make it easier to put them there.

When its crypto regulatory advisory report came out last week, the big news was the creation of the Digital Asset Coordinator (DAC) Network, a group of 150 prosecutors specially trained in cryptocurrencies and the workings of virtual asset service providers (VASP) like exchanges and money services businesses (MSBs) that on- and off-ramp dollars and other fiat currencies.

See also: Justice Department Signals Intent to Crack Down on Crypto Crime

But the report, “The Role of Law Enforcement in Detecting, Investigating, and Prosecuting Criminal Activity Related to Digital Assets,” came with a number of specific recommendations for legal changes to make their jobs easier and more successful. Several seemed to be aimed far beyond that of the crypto industry, most notably a proposal to double the maximum jail term for unlicensed money transmitting violations from five to 10 years and change judicial guidelines to better ensure lengthier sentences. These were essentially framed as “this would affect crypto, too.”

Read more: DOJ Seeks to Double Jail Time for Money Transmission Crimes

Anti-Tipoff Extension

But the Justice Department had another two high-priority legislative asks, beginning with a request to extend legal anti-tipoff provisions preventing officers or agents of financial institutions from informing customers that they are the subject of an investigation to VASPs.

These statutes, the DOJ said, “do not currently reach certain VASPs that operate as MSBs.”

The reason, it said, is that while they are defined as “financial institutions” under the broader Bank Secrecy Act, VASPs are not so defined in the law that forbids them from telling customers of a subpoena.

At that point, however, the DOJ returns to its apparent objective of expanding the broader anti-tipoff laws by noting that the subpoenas covered “omit serious offenses” such as racketeering, some drug- trafficking and human-trafficking offenses, tax crimes and securities violations, as well as some computer crimes, mail fraud and wire fraud schemes.

This is needed, it said, “in light of the growing use of digital assets across a broad spectrum of criminal activities.”

A Longer Statute of Limitations

The third and final high-priority request for congressional action is to extend the statute of limitation for all crimes involving the transfer of digital assets from the standard federal five years to 10 years.

The reason is that digital assets-related investigations “pose significant challenges” that can make them “complex and lengthy in duration, in part because their cross-border nature means that they require requests for mutual legal assistance from (often several different) foreign governments, which can take years to resolve.”

It also asks for the three-year suspension of the statute to be extended when foreign evidence needs to be obtained in digital assets-related cases.

 Down the Road

While not among the highest priorities, venue selection and records retention can be a substantial difficulty for digital asset cases against cryptocurrency and hosting companies that “claim to be located everywhere and nowhere (personnel in one place, registration in another place, records in a third place).” So the Justice Department wants to be able to prosecute alleged offenders in any district in which a victim is located.

And it wants more funding to do all of this.


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