DOJ’s Crypto Chief: No Exchange is ‘Too Big to Fail’

crypto, Reginald Fowler, Department of Justice

America’s cryptocurrency czar has promised an industry crackdown, regardless of the size of the exchange.

In an interview with the Financial Times published Monday (May 15), Eun Young Choi — head of the Department of Justice’s (DOJ) National Cryptocurrency Enforcement Team (NCET) — said her agency is going after companies that commit crimes or permit them to happen following a “significant” growth in illicit activities in the digital asset space.

“But on top of that, they’re allowing for all the other criminal actors to easily profit from their crimes and cash out in ways that are obviously problematic to us,” Choi added. “And so we hope that by focusing on those types of platforms, we’re going to have a multiplier effect.”

Choi was appointed to head NCET last year. As PYMNTS wrote at the time, her team was created to investigate the criminal use of digital assets, with an emphasis on virtual currency exchanges, mixing and tumbling services, infrastructure providers, and other entities that facilitate or commit crimes.

Her comments follow a year in which the cryptocurrency sector was rocked by the fall of FTX, which — as the FT report notes — had been seen as a solid presence in a rocky industry. Sam Bankman-Fried, the company’s founder, has been charged with numerous fraud and conspiracy charges, but maintains his innocence.

In addition to FTX, regulators and federal law enforcement have also targeted Binance, the world’s largest crypto exchange. For example, the Commodity Futures Trading Commission sued the company in March for operating illegally in the U.S., though Binance has said it does not serve American customers.

Industry observers have noted that a prosecution of Binance or founder Changpeng Zhao could further destabilize the crypto world, but Choi told the FT that the size of a company “is not something that the department will countenance” while weighing potential charges.

If a crypto exchange “has amassed a significant market share in part because they’re flaunting U.S. criminal law,” the government cannot “be in a position where we give someone a pass because they’re saying ‘Well, now we’ve grown to be too big to fail,'” Choi said, without mentioning any specific firms.

Meanwhile, other federal agencies have been upping their crypto enforcement efforts as well. As covered here earlier this month, the Securities and Exchange Commission (SEC) — under the leadership of Chairman Gary Gensler — has so far this year handed out 13 enforcement actions, putting it on track for a more than 25% increase over last year’s numbers.

“Along with shifting the focus from individual tokens to trading platforms that cater to U.S. investors, Gensler has separately increased the number of enforcement attorneys in the SEC’s crypto unit — a move that observers say indicates the SEC chair intends to execute further charges in the coming months as his agency casts as wide a net as possible,” PYMNTS wrote.