The crypto token asset class has grown substantially in the last couple of years, drawing the watchful eyes of regulators. While the emerging world of crypto has created more questions than answers, the U.S. Securities and Exchange Commission (“SEC” or “Commission”) remains clear that investor protection remains at the forefront of its mission and that mission extends to where money is to be made in connection with the offer or sale of securities. To this end, the Commission has increased its regulation of crypto asset tokens, and crypto industry participants at all levels of engagement with this market should pay attention.
It has been over a year since the Colonial Pipeline cybersecurity incident, and the Department of Homeland Security’s Transportation Security Administration (“TSA”) continues to issue cybersecurity directives to owners and operators of critical pipelines and liquified natural gas facilities.
Earlier this month, Deputy Attorney General Lisa O. Monaco spoke on cybersecurity developments at the International Conference on Cyber Security (“ICCS”); the same day, the U.S. Department of Justice (“DOJ”) released its Comprehensive Cyber Review (the “Cyber Review”).
Enforcement of corporate crimes, which languished for two years during the COVID-19 pandemic, will grow more vigorous this year and may be accompanied by significantly tougher penalties, partners with Vinson & Elkins’ (“V&E”) Government Investigations & White Collar Defense practice say.
Speaking at the Munich Cyber Security Conference on February 17, 2022, Deputy Attorney General Lisa O. Monaco announced that the U.S. Department of Justice (“DOJ”) plans to prioritize “cyber disruption,” foster international partnerships, and increase its investigative and deterrent capabilities to bolster its crypto-enforcement arsenal and to combat cyber threats.
On March 9, 2022, President Joe Biden issued an Executive Order on Ensuring Responsible Development of Digital Assets that directs federal officials to consider the effects of “distributed ledger technology,” popularly known as “blockchain” or “crypto,” on a host of important policy areas such as data privacy, financial stability, and even climate change.
As a strong signal that it intends to increase its focus on illicit crypto transactions, the Department of Justice (“DOJ”) announced the creation of an enforcement team, the National Cryptocurrency Enforcement Team (“NCET”), on October 6, 2021.
Larry Dean Harmon, the founder and operator of Helix, a darknet-based cryptocurrency “mixer” or “tumbler,” recently admitted that Helix partnered with darknet marketplaces to provide bitcoin money laundering services for darknet market customers.
On August 3, 2021, Securities and Exchange Commission (“SEC”) Chair Gary Gensler made headlines when he dubbed the current cryptocurrency landscape the “Wild West.”
On June 24, 2021, UK law enforcement seized a record-setting £114 million (nearly $160 million) in cryptocurrency as part of an ongoing money laundering investigation.
On February 18, 2021, the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) announced a half-million dollar settlement with BitPay, Inc. (“BitPay”), a U.S. company that processes digital currency transactions, for apparent sanctions violations involving buyers located in embargoed jurisdictions.