The recent news that the U.S. Department of Justice (DOJ) is disbanding its crypto unit and shifting focus from prosecuting platforms to targeting individuals who harm crypto investors or use digital assets for illegal activities may be seen as a sign of a significant sea change in the Government’s “regulation by prosecution” approach to financial crimes. Very often, criminal prosecution in the securities, health care, and cryptocurrency arenas is focused on violations of complex and often opaque regulations, which is why such prosecutions very often emerge alongside parallel civil investigations. Criminal defendants and their attorneys have decried the Government’s blunt force approach to criminalizing what are essentially regulatory violations using the incredibly broad federal statutes for mail fraud (18 U.S.C. 1341); wire fraud,18 U.S.C. 1343); healthcare fraud (18 U.S.C. 1347); securities and commodities fraud (18 U.S.C. 1348), and the Computer Fraud and Abuse Act (18 U.S.C. 1040).
Likely, this move by the DOJ does not signal a looming retreat from such prosecutions, but instead represents a more targeted effort to promote innovation in the ever-developing digital currency platforms in alignment with President Trump’s Executive Order on digital assets. The end result is that the DOJ will no longer pursue actions that impose regulatory frameworks on digital platforms, leaving this instead to President Trump’s regulators. The DOJ will prioritize cases involving misappropriation of funds, scams, and hacks with the stated goal of protecting investors and building market confidence and will continue to target crypto use by criminal organizations.
Under this new policy, prosecutors are advised against charging regulatory violations unless there is evidence of willful misconduct (criminal intent), which really seems to be restating what should have been policy all along. Importantly, the DOJ will avoid litigating whether a digital asset is a security or commodity (a retreat from the Biden era’s position), preferring charges like wire fraud, but may consider bitcoin and ether as commodities. The U.S. Commodity Futures Trading Commission (CFTC) is adopting a similar approach, as directed by Acting Chair Caroline Pham deprioritizing registration violation actions unless there is evidence of willful non-compliance.
It is important if you are being investigated or charged with fraud to hire an attorney who has vast experience with white-collar federal criminal investigations and prosecutions. Often, early intervention in a case may prevent charges from ever being filed. Given the complexity of the federal regulations applicable to many industries, from health care to securities to banking, and the incredibly broad federal statutes that can be used to transform an investigation into a criminal case, you need to make sure that the attorney you hire has a practice that is primarily federal, with an in-depth understanding of the criminal statutes, the sentencing guidelines (driven by loss amounts and enhancements that can result in draconian sentences); federal forfeiture statutes, and restitution.
At Stahl Gasiorowski, partners Laura K. Gasiorowski and Robert Stahl have over 65 combined years of experience representing federal criminal defendants in the District of New Jersey, the Southern and Eastern Districts of New York, and in other federal courts across the United States. We have represented individuals and start-up platforms involving unregulated money transfer businesses, rug pulls, NFTs, material misrepresentations, and the use of paid celebrities and sport figures in marketing.
Stahl Gasiorowski Criminal Defense Attorneys have represented hundreds of individuals and companies subpoenaed by federal and state authorities. We have the experience and skills to effectively navigate our clients through these complex issues and investigations to achieve the best possible outcome. If you are looking for a crypto fraud lawyer,wire fraud lawyer, securities fraud lawyer or healthcare fraud lawyer, contact Mr. Stahl or Ms. Gasiorowski, call 908.301.9001 for the NJ office or 212.755.3300 for the NYC office, or email Mr. Stahl at rgs@sgdefenselaw.com or Ms. Gasiowski at lkg@sgdefenselaw.com.
