March 27, 2020
Crime And Punishment In The Cryptocurrency World
On December 2, 2019, prosecutors in the Southern District of New York unsealed a criminal complaint against Virgil Griffith for conspiracy to violate U.S. sanctions authorized by the International Emergency Economic Powers Act by providing services to the Democratic People’s Republic of Korea (North Korea). The indictment of Griffith, one of the developers of the Ethereum blockchain, is the first instance where the Department of Justice has publicly announced charges against a US citizen for conspiring to use cryptocurrency in an attempt to evade sanctions. It’s an interesting case of a developing technology being applied to laws dating back to 1977 (not long in years but generations in technological breakthroughs).
The complaint against Griffith alleges that he visited North Korea in April 2019 to give a presentation at the Pyongyang Blockchain and Cryptocurrency Conference, where the main topic of discussion was how blockchain and cryptocurrency technology could be used to launder money and evade international sanctions that keep it from becoming a developed nation.
In September 2019, OFAC announced sanctions against Lazarus Group and two of its sub-groups, Bluenoroff and Anaderiel, asserting they were directly involved in WannaCry 2.0 and the 2014 cyberattacks of Sony Pictures Entertainment. Joel Androphy, partner at Berg & Androphy said, “For a rogue nation like North Korea, it’s not just about evading sanctions, it’s a revenue stream.”
With cooperation from its allies, US prosecutors can use various statutes to indict and extradite those who commit offenses involving cryptocurrency abroad as well as in the United States. “The world can be a small place when it comes to the reach of US government agencies,” Androphy said, “and many people who get caught up in this stuff simply don’t know the laws that can get them in big trouble.”
Emily Burgess, an attorney who works with Androphy, told me, “Cryptocurrency transactions are only pseudonymous, not anonymous, and a user whose identity is uncovered faces significant penalties.”
For those who think crypto will hide them detection and, eventually punishment, you better think twice.