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How the DOJ Shaped Crypto Regulation in 2023

Key Players Targeted

In 2023, the Department of Justice (DOJ) played a leading role in shaping the cryptocurrency industry through high-profile criminal prosecutions that impacted some of the industry’s biggest names. The DOJ secured the conviction of Sam Bankman-Fried, the former CEO of FTX, as well as influencing the regulatory posture of Changpeng Zhao, the head of Binance (ft.com).

Legal experts acknowledge the DOJ’s proactive approach in actively defining the industry’s legal landscape through enforcement actions. The DOJ’s focus on fraud and anti-money laundering cases is seen as more impactful than the SEC’s focus on whether certain offerings constitute securities.

Parallel Complaints

There have been parallel complaints filed by both the DOJ and SEC in several high-profile indictments, such as those against Alex Mashinsky of Celsius and Do Kwon of Terraform Labs. However, the SEC has faced legal challenges bringing many of its cases related to cryptocurrency.

Difficulties at the SEC

The SEC has struggled with uncertainties over its jurisdiction and the classification of digital assets as securities. The SEC did not join a settlement between the DOJ and Binance, signaling an ongoing struggle to classify tokens on the exchange as securities. While the SEC has successfully resolved cases with some exchanges and celebrities, many major enforcement actions remain unresolved. #crypto

Competing Court Rulings

Competing court rulings have created an uncertain regulatory status for different crypto assets. SEC chair Gary Gensler maintains that existing securities laws are sufficient to regulate digital assets and opposes the need for new crypto-specific regulations. However, recent court rulings have sided with some crypto companies, such as decisions regarding XRP and the US-listed spot-bitcoin fund by Grayscale, going against the SEC’s views.

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