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DISCERNING DATA

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FBI Announces Increased Focus on Illegal Financial Transactions Involving Cryptocurrency

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Cryptocurrency has increasingly become an accepted form of financial exchange. However, it has also become a favored form of payment for cyber criminals.

In an effort to deter the use of cryptocurrencies in furtherance of criminal activity, the Federal Bureau of Investigation recently announced the formation of a Virtual Asset Exploitation Unit (VAXU). The VAXU will combine various investigatory, technical, and analytical resources, and the unit is charged with tracking the illicit use of cryptocurrencies and assisting in their seizure. This announcement follows close on the heels of the recent U.S. Department of Justice appointment of veteran federal prosecutor Eun Young Choi as the first director of the newly-created National Cryptocurrency Enforcement Team (NCET).

In the past, it has proven difficult for law enforcement to track the use of illicit cryptocurrencies. The formation of VAXU serves to address and alleviate this issue, and while significant law enforcement resources are being devoted to this new initiative, both DOJ and the FBI must work to strengthen their partnerships with private businesses, who will be relied on to report the use of cryptocurrency in connection with criminal activity.

The use of cryptocurrency for both legitimate and illegal activities continues to grow unabated. It is estimated that over 300 million people in the world own cryptocurrency, and over 18,000 businesses now accept cryptocurrency as payment. On the illicit side, almost 80% of all ransomware payments are made via cryptocurrency, and it is estimated that cryptocurrency payments for ransomware attacks exceeded $20 billion in 2021.

The creation of the VAXU is an acknowledgement that cryptocurrency plays an integral role in criminal activity and that additional resources are needed in order to ensure that cryptocurrency does not continue to fuel cyber or conventional crimes going forward.

The material contained in this communication is informational, general in nature and does not constitute legal advice. The material contained in this communication should not be relied upon or used without consulting a lawyer to consider your specific circumstances. This communication was published on the date specified and may not include any changes in the topics, laws, rules or regulations covered. Receipt of this communication does not establish an attorney-client relationship. In some jurisdictions, this communication may be considered attorney advertising.

About the Author: Jason G. Weiss

Jason G. Weiss leverages a past career as a cybersecurity and computer forensics Supervisory Special Agent with more than 22 years of decorated service at the FBI to guide clients through the complex and high-stakes issues associated with cybersecurity incident preparedness and response and compliance. View Jason's full bio on the Faegre Drinker website.

About the Author: Peter Baldwin

Peter Baldwin draws on his experience as a former federal prosecutor to counsel clients facing government investigations and cybersecurity issues. View Peter's full bio on the Faegre Drinker website.

About the Author: Grayson Harbour

Grayson Harbour is an associate in the firm's Labor & Employment practice group. Read Grayson's full bio on the Faegre Drinker website.

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March 15, 2022
Written by: Jason G. Weiss, Peter Baldwin and Grayson Harbour
Category: Cybersecurity
Tags: cryptocurrency, FBI, VAXU, Virtual Asset Exploitation Unit

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