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Criminals Are Watching the DOJ’s Crypto Shift. So Should We

Published

4 дня ago

15 апреля, 2025

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The Department of Justice recently issued new guidance directing prosecutors to scale back their efforts to investigate and litigate cryptocurrency crimes. This subsequently disbands the government’s National Cryptocurrency Enforcement Team (NCET) in an effort to prioritize immigration and procurement issues over cryptocurrency enforcement. While the DOJ frames this as a move to streamline resources, threat actors are watching – and adapting.

While it’s too early to observe its impact on the cryptocurrency world, I believe this move is more than a bureaucratic shuffle – it signals an enforcement vacuum that cybercriminals will rush to fill.

When Regulations Relax, Fraud Follows

Cybercriminals are highly adaptable and thrive in moments of regulatory ambiguity. When criminal enforcement – whether of blue-collar or white-collar crime – becomes limited, threat actors take note and often shift their operations outside the lines of prosecutable conduct. The same is true of the cryptocurrency space.

In the digital economy, especially within the decentralized, unregulated, and fast-moving world of Web3 and crypto, this gray area is fertile ground for impersonation scams, fake airdrops, phishing campaigns, and spoofed tokens.

Even before this policy change, scams involving fake coins, phishing sites, and wallet siphons were already on the rise. According to the FBI’s latest Cryptocurrency Fraud Report, cryptocurrency fraud amounted to $5.6 billion in losses, a 45% increase since 2022.

Now, as the glare of federal scrutiny moves away from the crypto space, individuals, exchanges, and brands otherwise vulnerable to impersonation must prepare for a rise in cryptocurrency fraud. Cybercriminals will continue to exploit platforms and dupe investors, especially in spaces where technical complexity, anonymity, and lack of regulation already hamper detection and enforcement.

Reactions from the Field: Relief or Concern?

The administration’s decision to rethink crypto enforcement has already elicited mixed reactions from legal experts, who echo the sentiment that the move may elicit fraudulent activity.

In a statement to the Washington Post, Vanderbilt University Law Professor Yesha Yadav underscored the importance of the NCET in disrupting criminal activity across the crypto space, noting that the government may find it harder to prosecute the “incredibly nimble, very opportunistic actors in this space.”

Similarly, Kleptocracy Initiative director and anti-corruption expert, Nate Sibley, emphasized that “Dangerous US adversaries rely on cryptocurrencies to launder money and evade sanctions.”

However, a different tune can be heard within the industry. Advocacy group DeFi Education Fund, which is led by executives from organizations including Coinbase and Kraken, Executive Director and Chief Legal Officer Amanda Tuminelli stated that it was heartened to see that the DOJ announced it is redirecting resources to prosecuting the bad actors who are actually culpable for misuse of technology rather than the builders of our financial future.”

On one side, experts looking from the outside warn that the move may lead to an increase in cybercrime, while those within the industry argue that shifting focus to crimes relating to terrorism and drug cartels is a better use of resources. Only time will tell which side is correct.

Frictionless Fraud: AI Lowers the Bar for Bad Actors

Complicating matters is the increasing use of AI by attackers. With an arsenal of generative AI tools at the fingertips of anyone with an internet connection, fraudsters can now produce scams that go beyond phishing links – they’re full ecosystems of deception: fake social media accounts, copycat token launches, cloned websites, and AI-generated influencers pushing scams.

The result? Digital fraud is not only becoming more prevalent, it’s becoming more believable and harder to detect.

What does this mean for those trying to build a safer crypto ecosystem?

How the Crypto Community Can Respond

As the United States government reprioritizes its criminal focus, the responsibility of protecting investors and brand reputations will fall even more heavily on the private sector. Here’s how blockchain platforms, exchanges, brands, and investors operating in this space can respond:

Audit your brand perimeter: Regularly scan for unauthorized token listings, fake domains, and imposter accounts.

Use threat intelligence tech: AI-powered monitoring can detect spoofed websites and phishing campaigns across Web2 and Web3.

Engage with regulators early: Don’t wait for regulation to hit. Anticipate it, and build compliant, trustworthy systems before it’s too late.

Collaborate across the ecosystem: Whether you’re a small-time investor or an exchange with billions of dollars of assets under management, sharing information across platforms (i.e., between exchanges, social media platforms, and wallet providers) is key to identifying emerging fraud patterns.

The DOJ’s pivot may be strategic. But its ripple effects — especially in a fast-moving space like crypto — are already visible. If you’re building in web3, now’s the time to tighten your defenses. Because for every dollar the government pulls back, bad actors are investing tenfold.

At the heart of every financial system – traditional or decentralized – is trust. And, right now, trust is one of crypto’s biggest vulnerabilities. Widespread impersonation and scams, coupled with limited enforcement, have created a sense of skepticism that keeps the broader public on the sidelines.

If companies operating in the crypto space want digital assets to become mainstream, they must take ownership of building trust from the ground up. That means doubling down on transparency, accountability, and proactive protection. Because until trust becomes the norm, adoption will remain the exception.

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Canary Capital Files for Tron ETF With Staking Capabilities

Published

11 часов ago

18 апреля, 2025

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Canary Capital is looking to launch an exchange-traded fund (ETF) tracking the price of Tron’s native token, TRX, according to a filing.

The hedge fund submitted a Form S-1 for the Canary Staked TRX ETF with the Securities and Exchange Commission (SEC) on Friday. As the name suggests, the fund — if approved — would stake portions of its holdings.

This would be done through third-party providers, with BitGo acting as custodian for the assets. The fund would track TRX’s spot price using CoinDesk Indices calculations.

A proposed ticker as well as the management fee for the product have not been shared yet.

Issuers had initially filed applications for spot ethereum (ETH) ETFs with the staking feature included but removed them in an amended filing later in order to receive approval from the SEC on their proposals.

While the SEC under former Chair Gary Gensler was strictly against staking, issuers have grown more hopeful that they will be able to add the feature to their spot ether funds, among others, with the appointment of crypto-friendly Chair Paul Atkins.

A decision on a February request from Grayscale to allow staking in the Grayscale Ethereum Trust ETF (ETHE) and the Grayscale Ethereum Mini Trust ETF (ETH) was postponed by the regulator just a few days ago.

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Feds Mistakenly Order Estonian HashFlare Fraudsters to Self-Deport Ahead of Sentencing

Published

12 часов ago

18 апреля, 2025

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Just four months ahead of their criminal sentencing for operating a $577 million cryptocurrency mining Ponzi scheme, the two Estonian founders of HashFlare were seemingly mistakenly ordered to self-deport by the U.S. Department of Homeland Security (DHS) — an instruction that directly contradicted a court order for the men to remain in Washington state until they are sentenced in August.

In a joint letter to the court last week, lawyers for Sergei Potapenko and Ivan Turogin told District Judge Robert Lasnik of the Western District of Washington that both men had received “disturbing communications” from DHS ordering them to leave the country immediately.

“It is time for you to leave the United States,” an email to Potapenko and Turogin dated April 11 read. “DHS is terminating your parole. Do not attempt to remain in the United States — the federal government will find you. Please depart the United States immediately.”

The email, included with the letter filed last week, threatened both men with “criminal prosecution, civil fines, and penalties and any other lawful options available to the federal government” if they stayed in the country. It resembles emails that undocumented immigrants and U.S. citizens alike have received over the past few days.

Ironically, Potapenko and Turogin are not in the U.S. of their own volition — they were extradited from their native Estonia at the request of the U.S. Department of Justice in 2022 on an 18-count indictment tied to their HashFlare scheme. Though they initially pleaded not guilty to all charges, in February they both pleaded guilty to one count of conspiracy to commit wire fraud, which carries a maximum sentence of 20 years in prison, and agreed to forfeit over $400 million in assets. They have both been in the Seattle area on bond since last July.

“Although there is nothing Ivan and Sergei would want more than to immediately go home, they understood that they are also under Court order to remain in King County,” wrote Mark Bini, a partner at Reed Smith LLP and lead counsel for Potenko, wrote in the pair’s joint letter to the court. Bini did not respond to CoinDesk’s request for comment.

In his letter, Bini said DHS’s emails had caused both Potapenko and Turogin «significant anxiety.”

“We and our clients have all seen recent news. Immigration authorities make mistakes, and individuals who should not be in custody end up in custody, sometimes even deported to places where they should not be deported,” Bini wrote.

Six days after Bini’s letter to the judge, the DOJ filed its own letter with the court saying that prosecutors had coordinated with DHS’s Homeland Security Investigations (HSI) division and secured a year-long deferral to the self-deportation order.

“This should provide ample time for the sentencing to take place,” the prosecution’s letter said.

DHS did not respond to CoinDesk’s request for comment.

Potapenko and Turogin are slated to be sentenced on August 14 in Seattle. Their lawyers have said that they will request to be sentenced to time served, meaning no additional time in prison, and to be sent home to Estonia “immediately.”

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CoinDesk Weekly Recap: EigenLayer, Kraken, Coinbase, AWS

Published

13 часов ago

18 апреля, 2025

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Following last week’s tariff-caused drama, this was a relatively quiet week in crypto. Bitcoin remained stable around $84k. The CoinDesk 20, which tracks about 80% of the market, was up about 4% in the last seven days — i.e. nothing historic.

Still, plenty happened. On Tuesday, much of crypto went offline because of a tech issue at AWS, showing how the decentralized economy isn’t always that decentralized. Shaurya Malwa reported the news early. Bitcoin and other major cryptos slipped on bad news for Nvidia, Omkar Godbole reported.

Mantra, a project focused on real world assets, lost 90% of its value. Explanations varied (the company said it was due to “force liquidations” exchanges).

Meanwhile, EigenLayer, a restaking leader, rolled out a “slashing” feature meant to address security concerns (Sam Kessler reported). OKX, a major exchange, announced plans to set up in California following a $500 million settlement with the SEC over claims it operated previously in the U.S. without a money transmitter license. Cheyenne Ligon had that story.

In less good news, Kraken laid off “hundreds” of staff ahead of an expected IPO. And Coinbase became embroiled in a “front running controversy” linked to a curiously named token on its Base L2. Privacy advocates reacted with alarm to rumors that Binance was about to delist Zcash following a long decline in the value of privacy coins.

In D.C. news, Jesse Hamilton reported on a new wave of crypto lobbyists flooding the capital. Some asked if there are now too many trade groups and whether they really all could be effective.

Friends With Benefits, a buzzy social club for creative technologists, launched a new program to build Web3 products for music, film, publishing and other fun activities. (I wrote that one.)

Of course, there was plenty happening in the economy and markets (Trump’s disgust for Fed chair Powell fed into the unease). But, in crypto, it was pretty much business as usual. Fortunes won, fortunes lost, fortunes deferred.