Cryptocurrencies are victims of their own success.
After reaching unparalleled popularity in 2021 and peaks in price, digital currencies now seem to be at the center of the concerns of regulators.
This attention has just taken a big step forward. The Department of Justice formed a special unit to tackle fraud in the cryptosphere.
The National Cryptocurrency Enforcement Team will be led by Eun Young Choi, according to a news release from the DoJ.
Choi is a veteran prosecutor who most recently served as senior counsel to the deputy attorney general, the agency said. Her appointment is effective immediately.
“With the rapid innovation of digital assets and distributed ledger technologies, we have seen a rise in their illicit use by criminals who exploit them to fuel cyberattacks and ransomware and extortion schemes; traffic in narcotics, hacking tools and illicit contraband online; commit thefts and scams; and launder the proceeds of their crimes,” Assistant Attorney General Kenneth A. Polite Jr. of the Justice Department’s Criminal Division said in a statement.
He added: “The NCET will serve as the focal point for the department’s efforts to tackle the growth of crime involving these technologies."
Crypto Hacks Are Rising
Most major cryptocurrencies were recently trading lower. Bitcoin fell 4.1% to $41,938.29 and ethereum fell 3.6% at $2,973.63.
The NCET, the statement says, "will identify, investigate, support and pursue the department’s cases involving the criminal use of digital assets, with a particular focus on virtual currency exchanges, mixing and tumbling services, infrastructure providers, and other entities that are enabling the misuse of cryptocurrency and related technologies to commit or facilitate criminal activity."
The NCET will work with several national security agencies, including the U.S. attorneys’ offices, the National Security Division, and the FBI, according to the DoJ.
The DoJ's announcement comes as hacks are on the rise in the cryptopshere.
In addition, crypto scammers ripped off over $7.7 billion of cryptocurrency in 2021, up 81% from a year ago, according to a report from Chainalysis.
A big factor this year was the emergence of rug pulls, the firm said, a relatively new type of scam common in the decentralized finance, or DeFi, ecosystem. Rug pulls occur when developers of a cryptocurrency project — typically a new token — abandon it unexpectedly, taking users’ funds with them.
The White House and Treasury are currently working on regulation of cryptocurrencies. Meanwhile local initiatives in different states - Tennessee, Arizona, Colorado -- seem to be embracing digital currencies.
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