How far can the Justice Department really go to prosecute foreign actors?

the beginning of October The U.S. Department of Justice announced its enforcement framework for cryptocurrencies. A report exposing the government’s vision for emerging threats and law enforcement strategies in the cryptocurrency space. The document is an important source of information on how digital finance laws will soon be implemented locally.

One of the basic principles of government It says in the document It is its broad extraterritorial jurisdiction for overseas actors who use virtual assets in harmful ways against US citizens or businesses. The guide sets an extremely low bar for perpetrators of cross-border crimes to get out of action before prosecution.

According to the frame, It may be sufficient for a cryptocurrency transaction to “touch” financial, data storage, or other computer systems in the United States to trigger legal action. Is the rigor of this approach unprecedented in other areas of financial crime enforcement? What real tools does the US government have to counter criminals operating from abroad?

As usual

How far can the Justice Department really go to prosecute foreign actors?
How far can the Justice Department really go to prosecute foreign actors?

The idea that using US law to prosecute criminal actors across national borders when their activities have harmed an individual, business, or household infrastructure is nothing new is nothing new. especially when it comes to cyber and financial crimes.

Arlo Devlin-Brown, A partner in the clerk’s office at law firm Covington Burling told Cointelegraph:

“The Department of Justice has consistently taken the position that United States criminal jurisdiction extends to activities with minimal ties to the United States, and the United States courts have in many cases adopted the expansive interpretation of the authority of cryptocurrency companies operating outside the United States are, but have some connection to this country, bank accounts, customers and marketing activities are threatened by legal action. “

Dan Newcomb, Shearman Sterling law firm attorney said the offshore approach enshrined in the cryptocurrency compliance guidelines is not particularly exceptional. since then, the Justice Department has previously used “a variety of tools to hold foreign actors accountable for crimes punishable under United States law. “

The report’s authors note that The United States has been using anti-money laundering measures against foreign actors operating fiat currencies for decades. Having similar jurisdiction over those who use digital currencies seems to be a reasonable extension of the principle already in place.

Cryptocurrencies aren’t new either

The United States government has prosecuted foreign individuals and organizations involved in cryptocurrency-related crimes on multiple occasions. Gail Fuller, Vice President of the K2 Intelligence Financial Integrity Network, The broad extraterritorial jurisdiction asserted by the Justice Department was “largely in line with the general US regime for the enforcement of financial crime”. This is to protect the integrity of the United States financial system. Fuller commented:

“We have seen US enforcement actions of sanctions and money laundering violations directed against a foreign person or entity if their transactions concerned the United States or its banks. In fact, we’ve seen it before in the context of cryptocurrencies, including the 2017 indictment against foreign crypto exchange BTC-e and its Russian CEO Alexander Vinnik. “

According to Fuller The BTC-e case is particularly interesting because, in addition to the money laundering allegations, the Justice Department also accused the exchange of failing to register as a monetary service provider in the US. based on the volume of related US-related transactions.

James Farrell, The trading solutions provider’s assistant general counsel, Apifiny, sees the law enforcement guidelines as a reminder to the crypto industry of something that traditional finance has known for more than a decade: “When it’s a bad act.” Financial conduct has a material impact on the United States, and the SEC and the Department of Justice can and will investigate those responsible. “ “Claiming that a single US agent is enough only underscores how little the DOJ needs to enforce its jurisdiction.” Farrell added.

For Farrell, The novel – and surprising – part of the report is the appeal to “protective jurisdiction,” in fact the global law enforcement agency, when the Justice Department believes that activities involving cryptocurrencies can have an impact on national security. Farrell said:

“You see this concept anchored in international treaties on hostage-taking, terrorist attacks and terrorist financing. To hear that the same foundation can be applied to the cryptocurrency industry was staggering and an indicator of how seriously the Justice Department takes the potential criminal abuse of this transformative and evolving technology. “

Law enforcement tools serving the Ministry of Justice

Proclaiming jurisdiction over people and organizations that may be thousands of miles off the coast of the United States is simply a symbolic step when there are no real means of holding them accountable. However, US law enforcement has a large arsenal.

A heavy weapon This is the level of control that United States financial authorities have over the traditional global monetary system. Dan Newcomb Shearman Sterling commented on Cointelegraph:

“The most important compliance instrument in the USA is the dominant role of the US dollar in international trade and the fear that conventional financial institutions could be excluded from US dollar transactions. Most digital asset owners need and want to convert those assets to traditional currencies at some point in the financial institutions. It is a powerful tool to prevent a digital player from accessing traditional financial institutions. “

Devlin brown by Covington Burling said The Department of Justice can rely on a number of powerful laws that can be used to prosecute cryptocurrency actors residing abroad:

“For example, the United States Money Laundering Act can apply to almost any US dollar transaction that US authorities can set up that involves many types of criminal activity. For example, Germany is covered to Argentina because a US American bank is likely to act as an intermediary in the transaction. “

Michael Yaeger, a white-collar crime attorney with the Carlton Fields law firm and former United States Assistant Attorney for the Eastern District of New York, He told Cointelegraph that the Justice Department report did not reveal any new tools to prosecute foreign actors. However, Yaeger noted: that the collection of previous cases shown in the document “provides useful examples of its powers and possibly indications of which instruments will be used more frequently in the future”.

One thing that caught Yaeger’s attention It’s the fact that the report seems to mention the seizure efforts more than previous DOJ reports on cybercrime:

“When the seizure is tied to the pre-trial seizure of assets, it is not only an effective but also an unusually rapid means. The United States has several cooperation agreements with other countries, including agreements to share data with foreign law enforcement agencies, law enforcement and intelligence agencies and has specific arrangements related to the seizure and exchange of financial information. “

There is no doubt that the government is ready to use this and other international agreements to implement its new law enforcement strategy. Promoting collaboration with foreign governments and intergovernmental organizations such as the FATF is one of the priorities of the framework for cryptocurrencies.

The language of the DoJ’s framework for extraterritorial jurisdiction and cross-border enforcement may sound harsh to some. In reality, however, the government is not formulating any drastically different principles than those already cited in some high profile cryptocurrency cases. It makes sense to say that these standards will be applied more systematically, given the expansion and maturation of the limitless realm of digital finance.

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