Top US agencies ready to wage crusade across the crypto industry
Investigations into fraudulent initial coin offerings, unregistered exchanges, and dodgy lending programs in the crypto industry are among the top priorities for US law enforcement, a panel of leading legal professionals has said.
As reported by Law360, the warning came from attorneys of the Department of Justice (DoJ), Securities and Exchange Commission (SEC), and Commodity Futures Trading Commission (CFTC).
The gathered laid out where each agency will focus their resources during this week’s American Bar Association’s annual institute on white-collar crime in Miami.
SEC enforcement director Gurbir Grewal reckoned his organization will be going after industry gatekeepers, including attorneys and audit firms.
The markets watchdog will also look to ensure bad actors in the crypto sector “are abiding by the rules.”
The CFTC wants to assist the SEC’s crypto crusade. Acting director of enforcement Vincent McGonagle noted his agency will concentrate on digital assets and blockchain-powered finance.
“In the digital asset space, we’ve brought several actions against entities where they’re offering digital assets, Bitcoin, or others on a margin or finance basis,” said McGonagle (via Law360).
Read more: [SEC chair Gensler sticks to ‘Wild West’ shtick in Congress crypto testimony]
McGonagle also suggested the CFTC will be pay attention to cases where crypto has become intertwined with other products.
He told the Miami panel: “Forex, for example, combined with a digital asset, is an area of interest for the CFTC.”
The DoJ also highlighted its plans. While it stopped short of explicitly targeting the crypto industry, it’s easy to see where some overlap may occur.
Principal deputy assistant attorney general Nicholas McQuaid told the panel the DoJ’s top priority will be the prosecution of individuals (standard practice).
And Bryan M. Boynton, acting assistant attorney general of the DoJ’s Civil Division, said the agency would clamp down on cyber fraud.
“We will be targeting companies who knowingly provide deficient cyber products and services, who make misrepresentations about their services, and who engage in failures to report breaches and things like that,” warned Boynton.
CFTC to be crypto industry’s ‘beat cop’
Earlier this week, acting CFTC chairperson Rostin Behnam posited the agency needs to be like a “beat cop” across the crypto industry.
Benham told Senate Committee hearing that despite the CFTC “aggressively pursuing” a number of crypto cases against the likes of BitMEX, Tether, and Bitfinex, this was just the start.
He asked that the committee increase the CFTC’s authority to help it tackle the risks posed by the burgeoning crypto market.
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“This is the tip of the iceberg,” said Benham (our emphasis). “As of yesterday, the total size of the digital asset market was $2.7 trillion. Among that $2.7 trillion, nearly 60% were commodities.”
“Given the size, the scope and the scale of this emerging market, how it’s interfacing and affecting retail customers, and with the scale of the growth being so rapid, potential financial stability risks in the future, I think it’s critically important to have a primary cop on the beat.”
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