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New administration and continued action by the Department of Justice on cryptocurrencies, October 30th – November 6th

November 7, 2020

Every Friday, Law Decoded provides an analysis of the week’s critical political, regulatory and legal stories.

Editor’s note

Have you already passed the elections? I’ve already got over it. But you can bet on it As soon as I finish writing the Law Decoded this week, I will compulsively check what is happening in Georgia and Pennsylvania. And I guess I’m not the only one.

Although the elections hijacked all news cycles, cryptocurrencies haven’t been abandoned in a corner. Most notably, Bitcoin is likely to hit highs it hasn’t seen since January 2018. Since the price of BTC tends to respond positively to fears of political instability, this is not entirely surprising.

New administration and continued action by the Department of Justice on cryptocurrencies, October 30th – November 6th
New administration and continued action by the Department of Justice on cryptocurrencies, October 30th – November 6th

The most specific interactions that regulators have with cryptocurrencies are ongoing enforcement actions. The US Department of Justice has taken the lead internationally. Law Decoded has spoken at length about the Justice Department for good reason. They have taken giant strides to get to the fore in what they believe to be illegal use of cryptocurrency since a framework was released in early October to help digital currencies comply with regulations.

While we may see some legal tantrums and vote counts, Biden appears to have won the White House. The Ministry of Justice is headed by the Attorney General. Bill Barr He’s the current prosecutor and it was for Trump. While the regulator is unlikely to reverse its new cryptocurrency monitoring functions, Barr was at the forefront of this fight, as well as other anti-tech measures to ban end-to-end encryption and Section 230. The attitude of a Biden candidate looking to replace Barr will therefore be very important.

A deal with the Justice Department

The Ministry of Justice filed a motion to confiscate a large amount of tokens that came from the Silk Road, after an investigation by the IRS and Chainalysis.

The pile of cryptocurrencies has a total value of USD 1 billion and they have been controlled by an unknown hacker. whom the files of the Ministry of Justice make enigmatic “Individual X”. Mr X had apparently delivered these tokens to the Justice Department on November 3rd, the day the funds were transferred.

According to the complaint in 2013, single X stole at least 69,471 bitcoin from Ross Ulbricht, the founder of the Silk Road, currently serving a double life sentence. Except for a transfer of 101 BTC to the defunct BTC e-exchange These coins had remained largely intact and had passed through a series of forks and gained in value.

Some speculation suggests that the hacker in question did a lot to avoid going to jail. The complaint states that Ross Ulbricht knew his identity online, which could mean that Ulbricht provided his information to obtain some leniency for his own conviction. $ 1 billion can likely convince the judicial system to be very compassionate.

The purchase of plaid by Visa has been heavily criticized

Last week, Cointelegraph reported on a news series that the Justice Department was investigating Visa’s acquisition of Plaid for $ 5.3 trillion. which was originally announced in January. This week, the agency filed a formal complaint, Initiation of an antitrust lawsuit which, if successful, would cancel the takeover.

Antitrust considerations have become very important lately because of Concern that the use of data is a new means of illegally dominating the market for which the Sherman Act of 1890 was ill-prepared. Top tech companies need to answer questions about how they prioritize content and share consumer information.

Plaid is a recognized mediator who enables the interaction between digital systems that handle financial information. This type of personal information is somewhat prone to keeping people private. The Justice Department claims Visa is trying to swallow a potential competitor. But no matter Plaid faces a number of class action lawsuits over its own misuse of customer data. This is especially egregious because most of the people who submit their information through Plaid don’t even know they are doing so. Perhaps that caught the attention of Visa.

Are the Cayman Islands coming from the cold?

New Cayman Islands legislation has started tightening controls against money laundering in the country’s cryptocurrency market, and specifically to increase the registration of local cryptocurrency exchanges.

The legislature of the Cayman Islands initially began considering a comprehensive review of cryptocurrencies in April, However, the first provisions are currently being implemented.

Like many other UK territories and overseas crown addictions The Cayman Islands have a long history as a hotbed of tax evasion, offshoring and money laundering. It seems that they are trying to at least partially change this picture. The European Union only removed the country from the blacklist in October, although it was not yet on the white list. The US still identifies the jurisdiction as “higher risk”.

The problem is, that Most of these tax havens derive much of their income from hosting financial services that the UK itself, the European Union or the US would not allow. How much motivation do the Cayman Islands have to clean up their actions?

further reading

Chris Giancarlo and Daniel Gorfine of the Digital Dollar Project burdened a cashless future for MarketWatch.

Volkov Law Group finished his analysis of Framework for enforcing the DOJ’s cryptocurrency published last month.

The Brookings Techstream gathered the misinformation seen during the week the presidential election.