US Justice Department unveils new network to tackle digital asset crime

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The United States Department of Justice (DOJ) has taken a major step towards curtailing the activities of bad actors in the digital assets industry. In a new report, the Department announced the creation of the Digital Asset Coordinator (DAC) Network to “combat the growing threat” of criminals leveraging these assets.

The DAC Network’s rank will be drawn from 150 prosecutors from the U.S. Attorneys’ Offices across the country, with each coordinator offering their units guidance on the modus operandi of the technology. The report notes that a core feature of the network is that coordinators will be armed with the knowledge of laws regarding virtual currencies and the best practices in handling matters bordering on smart contracts, decentralized finance (DeFi), and their application in criminal activity.

The move follows U.S. President Joe Biden’s executive order on digital assets, which places a burden on law enforcement agencies to develop a “framework and policy recommendations” to advance the priority of the law.

“Through the creation of the DAC Network, the Criminal Division and the National Cryptocurrency Enforcement Team will continue to ensure that the Department and its prosecutors are best positioned to combat the ever-evolving criminal uses of digital asset technology,” said Kenneth A. Polite Jr., Assistant Attorney General of the Criminal Division.

Apart from creating the network, the DOJ also released a report on the state of crime in the industry. The report, titled “Role of Law Enforcement in Detecting, Investigating and Prosecuting Criminal Activity Related to Digital Assets,” classified bad actors into three categories.

The first are those that rely on virtual currencies like BTC as payment for illicit activity, while the second involves users that leverage them to conceal their illegal schemes. The last category is made up of participants in “crimes involving or undermining the digital asset ecosystem.

Other recommendations in the report ask Congress to review the laws applicable to the industry, especially those involving statutes of limitations and tipping suspects of ongoing investigations.

Feds reining the wild, wild West

For law enforcement agencies, virtual currencies are often seen as a huge chasm because of the relative anonymity it provides for users. However, this has not fazed the DOJ from making valiant attempts at policing the sector.

The Justice Department has scored some vital wins over bad actors, like the recovery of a large chunk of the ransom paid during the Colonial Pipeline hack. The DOJ instituted several court cases against individuals involved in hacks, fraud, and Ponzi schemes involving digital assets.

The Federal Bureau of Investigation (FBI), an agency under the DOJ, has issued several warnings to residents on how to protect themselves from the rising spate of virtual currency crimes in 2022.

Follow CoinGeek’s Crypto Crime Cartel series, which delves into the stream of groups from BitMEX to Binance, Bitcoin.com, Blockstream, ShapeShift, Coinbase, Ripple,
Ethereum, FTX and Tether—who have co-opted the digital asset revolution and turned the industry into a minefield for naïve (and even experienced) players in the market.