Opinion by: Genny Ngai and Will Roth of Morrison Cohen LLP
Since the operation, the Trump administration has appointed certain drugs and violent cartels as foreign terrorist organizations (FTO) and specially designated global terrorists (SDGT). US President Donald Trump also called for the “total removal” of these cartels and more. These executive directives do not improve for the cryptocurrency industry. On their face, these mandates appear to be focused only on criminal cartels. Make no mistake: these executive actions will cause unexpected collateral damage to the digital asset community. Crypto actors, including software and investors developers, may be caught in crosshairs of aggressive prosecution of anti-terrorism and follow-on civil demands.
Increased threat of anti-terrorism investigations
The biggest threat that comes from Trump’s executive order in the cartels is the Department of Justice (DOJ). Almost immediately after President Trump called for the appointment of cartels as terrorists, the DOJ released a memo directing federal prosecutors to use “most serious and extensive charges,” including anti-terrorism charges, against cartels and transnational criminal organizations.
This is a new and serious development for prosecutors. Now that the cartels are appointed as terrorist organizations, prosecutors may exceed traditional drugs of drug and money-laundering and rely on anti-terrorism laws such as 18 USC § 2339B-the support-supported material support-to investigate cartels and whoever believes they are “deliberately providing”
Why should the crypto industry be remembered for these developments? Because “material support or resource” is not only limited to providing physical weapons to terrorists. “Material Support or Resources” is widely defined as “any ownership, tangible or non -tangible, or service.” Anyone who deliberately gives any value to a designated cartel can now violate § 2339B.
Although cryptocurrency platforms are not financial institutions and will never take care of users’ properties, aggressive prosecutors can view the hardline that software developers design crypto platforms – and the funding of these protocols – provides “material support or resources” of harmful investigations against them.
This is not the possibility of abstract. The government has shown a willingness to do this aggressive position against the crypto industry. For example, the DOJ accused of blockchain developers based on software protocol Tornado Cash In laundering charges and penalties and accused them of running a large surgery of money laundering that washed at least $ 1 billion in criminals proceeds for cybercriminals, including a North Korean hacking penalty.
Recently: Crypto crime in 2024 is likely to exceed $ 51b, higher than that reported: chainalysis
In addition, the government believes that cartels use cryptocurrency in the launder who has been drugged and has brought many cases to charge individuals for laundering drugs that have taken through cryptocurrency for Mexico and Colombian medicine cartels. TRM LABS, a blockchain intelligence company that helps in reference Crime in crypto.
The digital asset community faces real risks here. Stretching to reputation damage and costs that come from defending anti-terrorism investigations, violations of § 2339b impose a maximum term of imprisonment of 20 years (or life if a death occurred) and financial penalties. Anti-terrorism laws also have extraterritorial reaching, so crypto companies outside the US are not immune to investigation or persecution.
Civil anti-terrorism laws are rising
The designation of Cartels as FTOS/SDGT will also increase the rate at which crypto companies will be filed under the Anti-Terrorism Act (ATA). Under the ATA, private citizens, or their representatives, can sue terrorists for their injuries, and anyone who “helps and abandones, by deliberately providing great help, or who conspires the person who has done such an act of international terrorism.”
The advice of aggressive plaintiffs has already relied on the ATA to sue cryptocurrency companies in court. After Binance and its founder pledged to guilty of criminal charges in late 2023, US victims on October 7’s Hamas attack in Israel accused of Binance and its founder under ATAthat the defendants say deliberately provided a “mechanism for Hamas and other terrorist groups to raise funds and transacts forbidden business in support of terrorist activities” and Binance processes nearly $ 60 million in crypto transactions for these terrorists. The defendants filed a motion to delete the complaint, which was granted in part and declined in part. To date, the District court allows the plaintiffs of the Ruman to continue against Binance with their aiding-and-abetting theory. Crypto companies should expect to see more ATA suits today that drug cartels are on the official terrorist list.
Watching is key
Crypto companies may think that Trump’s war against cartels has nothing to do with them. The fact is, however, that the effects of this war are widespread, and crypto companies may be accidentally drawn to fire. Now is not the time for the digital asset community to relax internal compliance steps. In anti-terrorism laws, crypto companies must ensure that transactions to all FTO/SDGTs have been identified and blocked, monitor new terrorist dedication, and understand areas of new geography risks.
Opinion by: Genny Ngai and Will Roth of Morrison Cohen LLP.
This article is for general information purposes and is not intended to be and should not be done as legal or investment advice. The views, attitudes, and opinions expressed here are unique and do not necessarily reflect or represent the views and opinions of the cointelegraph.
Related Articles
