The appointment of Eun Young Choi as the first director of the U.S. Department of Justice‘s (DOJ) National Cryptocurrency Enforcement Team (NCET) marked a turning point in the U.S. Government’s approach towards the crypto industry last year. Tasked with ensuring user safety in an evolving digital asset landscape, the team is now aggressively pursuing various cybercrimes and money laundering cases involving cryptocurrencies.
Interestingly, Choi’s department isn’t focusing on high-profile scandals, but rather on smaller issues like social media scammers, darknet misuse, and online fraudsters. These crimes, though seemingly minor in scale, have a cumulative impact on victims and the crypto industry’s reputation. Over $112 million has been recovered from just six U.S-based scams, while the FBI estimates that $3.31 billion was stolen last year through investment fraud, with crypto scams accounting for over a third.
While the debate over the extent of illicit usage of cryptocurrencies is ongoing, it’s worth noting that only 1% of total crypto transactions can be tied to illicit use, according to data from Chainalysis. Most people using crypto are trading, with growing adoption in countries like Turkey and Argentina. However, this statistic may be a conservative estimate since not all blockchain addresses can be tied to known individuals.
Choi’s recent statement that the NCET is observing cryptocurrencies in almost every aspect of criminal activity they investigate sheds light on the issue’s magnitude. This includes ransomware exploits, confidence games, and even sanctions-evasion. Although the U.S. Treasury Department isn’t overly concerned about blockchain being used to evade economic blockades, it’s essential to manage expectations regarding crypto’s real-world use and acknowledge its downsides.
Acknowledging both the legal and illegal use of cryptocurrencies is crucial because there is often a disconnect between the promises made about crypto and the reality on the ground. For instance, while only 1% of crypto use may be illegal, several anecdotal experiences, including SIM-swaps, rug-pulls, and bitcoin-related illicit purchases would suggest otherwise. Misinformation and hype surrounding the technology allow crypto fraud to thrive, resulting in victimization and tarnishing the industry’s reputation.
Despite this, the very reason crypto attracts scammers and unscrupulous elements is also why the technology is so necessary. Being open-source, it’s accessible to anyone, even those with malicious intent. Crypto’s power lies in its potential for all users, and it wouldn’t be considered revolutionary if it were restricted. The increased transparency brought by companies like Chainalysis helps align expectations with reality, and the attention of law enforcement agencies on surveilling the blockchain can yield positive outcomes.
Ultimately, it’s up to the crypto community to recognize the challenges and develop strategies to address these issues, ensuring the long-term success and viability of cryptocurrencies in the ever-evolving digital world.
Source: Coindesk
