Alvin Bragg Advocates for Cryptocurrency Regulation
Alvin Bragg, the District Attorney of Manhattan, made a compelling case on Wednesday for state lawmakers to take action against unregulated cryptocurrency operations, which he claims are responsible for facilitating a criminal economy estimated at $51 billion. During his remarks at New York Law School, Bragg emphasized that the lack of stringent regulations creates opportunities for criminals to launder funds from illegal activities such as drug trafficking and fraud with ease.
Focus on Oversight and Accountability
Bragg has identified enhancing oversight of cryptocurrency as a key focus for his office in the upcoming term, alongside issues related to gun crime and retail theft. He called for legislatures to address existing loopholes that allow unlicensed crypto operators to escape legal consequences while engaging in significant money laundering activities.
“There must be immediate, robust accountability measures in place,”
he asserted.
“In fact, I want you to feel a sense of urgency around this issue—reach out to your representatives and demand action.”
Concerns Over Crypto ATMs
Specific attention was given by Bragg to unregistered crypto ATMs, which can impose fees as high as 20% for converting illicit cash into digital currencies. He highlighted the nefarious nature of these transactions, stating,
“These operators are fully aware that the money they’re converting is tied to criminal activity, yet they carry on without verifying the source.”
Proactive Enforcement Needed
Despite some successes in prosecuting cases—including dismantling a $5 million illegal Bitcoin ATM scheme—Bragg lamented that the reliance on criminals making mistakes is not a viable strategy for law enforcement, emphasizing,
“It is unacceptable that we must wait for a slip-up instead of proactively enforcing regulations.”
Proposed Regulations
Bragg’s proposal for mandatory licensing and customer identification processes for all cryptocurrency enterprises, accompanied by criminal penalties for non-compliance, would position New York as the 19th state to formally regulate unlicensed crypto businesses. He stressed that any entity involved in transferring or trading virtual currencies must adhere to these regulations.
Addressing Vulnerable Populations
During a question-and-answer segment, Margo Hoppen, a civil litigator, expressed concerns about vulnerable senior citizens in New York falling prey to elaborate scams commonly referred to as ‘pig butchering.’ Bragg noted that efforts to recover stolen cryptocurrencies are often met with significant obstacles, but he highlighted the potential of Senator Zellnor Myrie’s R.I.P.O.F.F. act, which could empower law enforcement with better resources to support victims.
Federal Actions and Expert Insights
Illustrating the critical nature of the issue, federal prosecutors in Massachusetts recently initiated civil forfeiture proceedings to recover $200,000 in USDT stablecoin from a Tinder-based scam targeting unsuspecting residents. Ari Redbord, a former Treasury Department official and current global head of policy at blockchain intelligence firm TRM Labs, commented on Bragg’s focus, remarking that effective enforcement requires not only willpower but also adequate resources and expertise. He emphasized the significance of investing in blockchain forensic technologies to enhance investigators’ capabilities, develop proficiency in handling digital asset-related cases, and ensure judicial systems are equipped to process such evidence effectively. Redbord’s insights underscore that the growing complexity of criminal activities across digital platforms requires a comprehensive and proactive approach to law enforcement.
