DOJ Announces National Network of Prosecutors Focused on Cryptocurrency Crime
Tracking the rise of crimes involving digital assets1 and its forward leaning approach to combating digital asset-involved crime,2 on September 16, 2022, the Department of Justice (DOJ) announced the creation of the Digital Asset Coordinator (DAC) Network—a national network of over 150 federal prosecutors from around the country focused on combatting crypto-related crime.3 The DAC Network will be led by the DOJ’s National Cryptocurrency Enforcement Team.4 This new initiative is a part of the Biden Administration’s broader push to bolster enforcement measures in the digital asset space, and “will serve as the [Justice] department’s primary forum for prosecutors to obtain and disseminate specialized training, technical expertise, and guidance about the investigation and prosecution of digital asset crimes.”5
Framework and Purpose of the DAC Network
The DOJ announced the DAC Network alongside the release of its report, “The Role of Law Enforcement in Detecting, Investigating, and Prosecuting Criminal Activity Related to Digital Assets,” which addresses the unique challenges that the rapidly-evolving world of crypto assets poses for law enforcement.6 Among other things, the report proposes increased funding “to hire and retain the skilled agents, analysts, prosecutors, and other attorneys essential to addressing existing and emerging threats relating to digital assets.”7
Further, as recommended in the report, prosecutors in the DAC Network will receive dedicated training and investigative resources tailored to crypto-related crime, an approach that DOJ has taken with specialized enforcement networks it has created in the past.8 Eun Young Choi, the first director of the DOJ’s National Cryptocurrency Enforcement Team, has suggested that the need for a network of specially-trained prosecutors is particularly pressing given the multidisciplinary nature of crimes involving digital assets, and the level of technical expertise that is required to build and successfully prosecute cases in this area.9 Choi emphasized that digital asset crimes often involve “cross-border, complex, and challenging investigations and they require a certain level of competency.”10
To ensure the efficiency of the program, DAC Network prosecutors will serve as the “subject-matter expert on digital assets” for their office, acting as a resource for “legal and technical matters related to these technologies.”11 The DAC Network will facilitate discussions surrounding emerging digital asset issues, including decentralized finance, “smart contracts,” and token-based platforms, as well as their novel and cross-border criminal applications.12 The constantly evolving nature by which cryptocurrency is used to facilitate money laundering, ransomware attacks, and financing for terrorism was a motivating factor in establishing the DAC Network.13
Takeaways
- Crackdown on Crypto Crime: DOJ’s formation of the DAC Network is another indication that it will continue its drive toward robust enforcement of criminal activity involving digital assets. The DAC Network’s creation signals that the DOJ is taking concrete steps to streamline, innovate and facilitate information-sharing in investigations in the digital asset space, which has traditionally been somewhat of a “wild west” for enforcement efforts. These developments suggest that increased funding, investment in technical training, and novel enforcement mechanisms will continue to rise as a priority for the federal government.
- Novel Applications for Crypto Continue to Develop: The formation of the DAC Network also signals the DOJ’s expectation that criminal activity involving digital assets will only continue to evolve and become more innovative. A primary focus of the DAC Network will be ensuring that prosecutors stay up to speed with these innovations, and continue to identify loopholes in the enforcement environment that “crypto criminals” may try to exploit.
1 Mengqi Sun and David Smagalla, Crytocurrency-Based Crime Hit a Record $14 Billion in 2021, WALL ST. J., Jan. 6, 2022, https://www.wsj.com/articles/cryptocurrency-based-crime-hit-a-record-14-billion-in-2021-11641500073?mod=article_inline.
2 See, e.g., Mayer Brown Client Alerts: Kopp, Parlovecchio & Rodriguez, US DOJ Announces Four Cryptocurrency-Related Fraud Prosecutions (July 14, 2022), https://www.mayerbrown.com/en/perspectives-events/publications/2022/07/us-doj-announces-enforcement-actions-for-cryptocurrencyrelated-frauds; Parlovecchio, Kopp & Leach, US DOJ Brings Its First-Ever Insider Trading Prosecution Involving Digital Assets (June 6, 2022), https://www.mayerbrown.com/en/perspectives-events/publications/2022/06/us-doj-brings-its-firstever-insider-trading-prosecution-involving-digital-assets; Parlovecchio, US DOJ Continues to Position Itself as Preeminent Global Enforcement Agency for Virtual Currency and Digital Assets (Feb. 22, 2022), https://www.mayerbrown.com/en/perspectives-events/publications/2022/02/us-doj-continues-to-position-itself-as-preeminent-global-enforcement-agency-for-virtual-currency-and-digital-assets.
3 Press Release, U.S. Dep’t of Justice, Justice Department Announces Report on Digital Assets and Launches Nationwide Network (Sept. 16, 2022), https://www.justice.gov/opa/pr/justice-department-announces-report-digital-assets-and-launches-nationwide-network.
6 Report, U.S. Dep’t of Justice, The Role of Law Enforcement in Detecting, Investigating, and Prosecuting Criminal Activity Related to Digital Assets (Sept. 6, 2022), https://www.justice.gov/ag/page/file/1535236/download.
9 Dustin Volz, Justice Department Forms National Network of Prosecutors Focused on Crypto Crime, WALL ST. J., Sept. 16, 2022, https://www.wsj.com/articles/justice-department-forms-national-network-of-prosecutors-focused-on-crypto-crime-11663322407.
