On October 8, 2020, the Department of Justice’s Cyber-Digital Task Force released an 83-page report entitled “Cryptocurrency: An Enforcement Framework.” In an accompanying press release, Attorney General Barr remarked, “Cryptocurrency is a technology that could fundamentally transform how human beings interact, and how we organize society. Ensuring that use of this technology is safe, and does not imperil our public safety or our national security, is vitally important to America and its allies.” The DOJ report highlights many of the legal and enforcement risks posed in the burgeoning crypto marketplace, and includes various enforcement case studies as well as informative graphics.
After an introductory essay by the chair of the Cyber-Digital Task Force, the report is organized into three parts. Part I begins with a brief survey of “legitimate” commercial uses for cryptocurrency, then describes three categories into which the DOJ believes most illicit uses of cryptocurrency typically fall. These illicit uses include (1) financial transactions associated with the commission of crimes or in support of terrorism; (2) money laundering and the shielding of legitimate activity from tax, reporting, or other legal requirements; and (3) direct commission of crimes, such as theft and fraud, that implicate the cryptocurrency marketplace itself.
Part II discusses various legal and regulatory techniques the government deploys to confront illicit uses of cryptocurrency. It also highlights the increased cooperation among the Department of Justice and other government agencies such as the SEC, the CFTC, and various units within the Department of the Treasury, to enforce federal laws in the cryptocurrency space.
Part III concludes with a discussion of the ongoing challenges the government faces in cryptocurrency enforcement. In particular, the report focuses on certain business models employed by some cryptocurrency exchanges, peer-to-peer platforms, crypto kiosks, and virtual casinos, as well as activities such as “mixing” and “tumbling,” “chain hopping,” and “jurisdictional arbitrage” that the DOJ believes may facilitate criminal activity. It also describes the government’s multi-faceted enforcement response.