US Courts Are Targeting Crypto Exchanges Avoiding Regulations

Investors can trade Bitcoin, Tether, Eth, and other digital assets on about 600 crypto exchanges available worldwide. As the importance of digital currencies increases, so do the rules and regulations put in place to govern them around the world.

Companies Designed to Circumvent Regulations Brews Confusion

Cryptocurrencies have long been considered the Wild West of remittances, but not online payments or money transfers companies have been as outspoken in their solicitation of illegal funds as the one featured in a recent report.

According to experts in the crypto law sector, the company is headquartered in a “comprehensively sanctioned country”— possibly North Korea — and it touted its services as circumventing US financial sanctions. As per court records, it was developed with the aid of a US cover firm that enabled domain name purchases.

The platform,  created to help pariah regions avoid financial restrictions, has handled more than $10 million in bitcoin transfers between the United States and the sanctioned country via a US-based crypto exchange that, according to the opinion, was unaware that it was assisting users in avoiding sanctions.

Judge Faruqui Says Illicit Crypto Financial Dealings Will Be Traced and Prosecuted

Someone has been arrested for operating the crypto platform, hence Magistrate Judge Zia Faruqui’s decision was likely unsealed. It’s all part of a larger trend in how US law enforcement—and the law—deals with cryptocurrencies.

“First, is virtual currency untraceable? WRONG…. Issue Two: virtual currency is exempt from sanctions? “WRONG,” Faruqui concludes, referencing two Saturday Night Live skits parodying TV anchor and political pundit John McLaughlin, who was noted for his straightforward style.

“We’ve heard a narrative for a long time that bitcoin may be used to evade sanctions,” says Ari Redbord, head of legal and governmental affairs at TRM Labs, which tracks crypto fraud and financial crime. “This is the first time the DoJ has brought a criminal case related to the fraudulent use of cryptocurrencies to evade punishment,” the statement said.

While the court’s decision establishes a legal precedent that authorities can and should track crypto transactions, it is otherwise unremarkable. The judgment warns crypto exchanges that they may be held accountable for aiding users to avoid sanctions, whether intentionally or unintentionally, and it serves as a warning to those attempting to do so.

Faruqui also added that the question is whether fiat currency rules will keep up with seamless and transparent blockchain payments.

State of Crypto Regulation

The potential consequences of cryptocurrencies for global financial stability, as well as the unique character of the underlying technology, highlight the need for regulatory conversations and prioritizing decisions both in countries and globally.

There has been no integrated and sustainable regulation of cryptocurrencies, according to the WEF Global Future Council on Cryptocurrencies, despite international groups working on analyzing risks and suitable policy responses to the rise of cryptos.

Central banks and authorities throughout the world are already keeping an eye on this rising trend. They all have the same goal in mind: to stabilize their monetary systems and foster innovation and economic progress.