US regulators are interested in the cryptocurrency sector – News Couple

US regulators are interested in the cryptocurrency sector

In her monthly column Expert Take, international tax attorney and CPA Selva Ozelli covers the intersection between emerging technologies and sustainability, providing the latest developments around tax, anti-money laundering and terrorist financing regulations, and legal issues affecting crypto and blockchain.

Lately, headlines have focused on regulators’ concerns about the lack of investor protection in the cryptocurrency market, which has ballooned to more than $2 trillion, and the potential risks to financial stability.

National security agencies across the administration of United States President Joe Biden have grappled with high-profile cases of cryptocurrency playing a role in ransomware attacks, intellectual property espionage, sanctions violations, bribery of government officials, and tax evasion.

According to a recent report by the Financial Crimes Enforcement Network, reports of suspicious ransomware-related activity submitted during the first half of 2021, which are 30% more than in the whole of 2020, indicate that ransomware poses a growing threat to the US financial sector. companies and the public

The Biden administration is considering an executive order for federal agencies to study and make recommendations on relevant areas of the crypto industry related to national security, economic innovation, and financial regulation. The initiative also aims to coordinate agencies’ work on digital currencies across the executive branch, with the White House’s first crypto czar serving as the primary.

International Consortium of Investigative Journalists “Pandora’s Papers”

The International Consortium of Investigative Journalists published “Pandora Papers,” which leaked nearly 12 million documents from law firms and other organizations around the world and revealed the owners of 29,000 previously unknown offshore companies stashing up to $32 trillion in assets worldwide from Tax or regulatory oversight in tax havens.

The owners of these companies include celebrities, political leaders and criminal figures from more than 200 countries. The leak has already launched investigations into corruption and tax evasion with several government officials around the world.

Meanwhile, a report by the World Economic Forum explains how blockchain technology can help deconstruct corruption in governments.

Related: CFTC Renewal: What Biden’s New Crypto Regulatory Agency Chooses

Office of Foreign Assets Control of the US Department of the Treasury

In a first-of-its-kind case, the Office of Foreign Assets Control (OFAC) recently targeted Suex, an over-the-counter cryptocurrency broker, for its alleged role in laundering proceeds from ransomware attacks. This effort was part of a cross-government effort to counter ransomware and disrupt the criminal networks and cryptocurrency exchanges that play a role in ransom laundering. The goal is to improve cybersecurity in the private sector and increase reporting of incidents to US government agencies and ransom payments. This includes both Treasury and law enforcement under the AML/CFT framework, as digital currency is the primary vehicle for facilitating ransomware payments and associated money laundering activities.

Following this case, OFAC issued an “Updated Notice of Potential Sanction Risks for Facilitating Ransomware Payments.” The updated advisory stresses that the US government continues to strongly discourage electronic ransom payments or extortion demands and that it recognizes that it is important to improve cybersecurity practices to prevent or mitigate such attacks.

Related: Compliance with penalties for transactions in fiat currencies and cryptocurrencies is the same

OFAC also updated the guidance text to emphasize that it is important to inform and cooperate with the appropriate government and law enforcement agencies in the event of a ransomware attack, in order to understand and combat ransomware attacks, malicious cyber actors, and attack victims to obtain voluntary self-disclosure credit in The status of the association of penalties being determined later. For more information, see the government website Stop Ransomware.

Given the financial risks of ransomware and money laundering posed by digital assets globally, participants in the Group of Seven (G7) meeting in June committed to urgently work together to address these rising risks effectively and quickly by implementing and enforcing the working group’s anti-money laundering standards Finance on digital assets and virtual asset service providers.

Related: Are cryptocurrency ransom payments tax-deductible?

IP and Cryptocurrency Spy

In other recent cases and reports, cryptocurrency has been involved in intellectual property espionage. Ethereum developer Virgil Griffith recently pleaded guilty to conspiring to violate the International Emergency Economic Powers Act — which is used to prevent US citizens from exporting technology and intellectual property to communist countries — when he gave a presentation on cryptocurrency and blockchain at a conference in North Korea in 2019. As part of A plea bargain, Griffiths could face up to 6½ years in prison when he is sentenced in January 2022.

Jonathan Tobey, a US Navy nuclear engineer with top-secret security clearance who specializes in naval nuclear propulsion – and had access to military secrets – was accused in October of trying to pass information about the design of US nuclear-powered submarines to someone. The Department of Justice stated that he was believed to be a representative of a foreign government in exchange for cryptocurrency in violation of the Atomic Energy Act.

Cybereason, an operations-focused cyber-attack protection service, has published a new report “Operation GhostShell: Novel RAT Targets Global Aerospace and Telecoms Firms” that exposes a highly focused cyber-espionage operation against global airlines and telecoms. The report, which followed the publication of the company’s “DeadRinger” report in August, reveals a newly identified Iranian representative, MalKamak, was behind the attacks and has been operating since at least 2018. Remote access to a Trojan known as “ShellClient” that evades antivirus software and other security tools and misuses cloud service provider Dropbox for command and control.

Related: The United States is updating its anti-money laundering and terrorist financing crypto laws

According to research published by Slovak security vendor ESET, a cyber-espionage group called FamousSparrow has targeted hotels, international governments, international organizations, engineering firms, and law firms since at least 2019. The group used a well-known vulnerability in Microsoft Exchange – which has also been exploited by suspected Chinese hackers and fraudsters seeking to mine cryptocurrency – to attack its victims, including the US Republican Governors Association. Although ESET has not linked FamousSparrow to a specific country, it has found similarities between its technologies and those of SparklingGoblin, a subsidiary of Winnti Group – which is linked to China – and DRBControl.

In July, the US government blamed China for exploiting Microsoft Exchange Server attacks, accused the Chinese government – for the first time – of employing criminal hackers to carry out the attacks, and issued a report warning of China’s continued targeting of defense. and semiconductor, medical and other industries for intellectual property theft.

The opinions, ideas and opinions expressed herein are those of the author alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Silva Ozelli, Esq. , CPA, is an international tax attorney and certified public accountant who writes frequently on tax, legal, and accounting issues for Tax Notes, Bloomberg BNA, other publications, and the Organization for Economic Co-operation and Development.