Former SEC Official John Reed Stark, has expressed his bewilderment at the seeming lack of action by the U.S. Department of Justice (DOJ) in cryptocurrency-related matters. Stark, who has extensive experience in the SEC Division of Enforcement, finds the lack of DOJ involvement in Bitcoin-related cases particularly striking.
Stark is primarily concerned about the noticeable difference in the enforcement measures taken by the SEC compared to the scarce criminal investigations and legal actions undertaken by the DOJ in cryptocurrency. He emphasized this by referencing the decision by both the DOJ and the SEC to refrain from naming the parent entities of a firm known as SBF as defendants. Stark opines that this decision highlights the disparity between the SEC’s frequent enforcement activities and the DOJ’s relatively infrequent criminal investigations in this sector.
Gemini’s leader, Tyler Winklevoss, has dismissed the charges as insignificant and compared them to “manufactured parking tickets.” Stark observes that leading cryptocurrency exchanges like Coinbase and Binance consider fees a mark of distinction. He clarifies that the SEC’s power is intrinsically restricted due to its designation as a civil enforcement agency. As a result, organizations may view the SEC’s regulatory measures as mere inconveniences in the absence of prosecutorial threats from the DOJ.
Furthermore, there are indications that the DOJ is considering imposing fraud charges against Binance, the leading cryptocurrency exchange globally. A federal indictment could lead to market instability and consumer harm. Therefore, legal authorities are considering other options, such as penalties or non-prosecution agreements, to avoid such negative repercussions.
The DOJ is also undergoing a reorganization of its National Cryptocurrency Enforcement Team (NCET) to manage the growing number of cryptocurrency-related investigations more efficiently. As part of this reorganization, the specialized unit, NCET, will be integrated into the department’s criminal division to examine and pursue computer-related cases more effectively.