DOJ Uses Wire Fraud Statute In Prosecuting Crypto Cases

Some heated issues in the crypto field include regulation and enforcement. The discussion centers on the complicated topic of whether to classify digital assets as securities, commodities, or as a whole other asset class. 

The Department of Justice (DOJ) has issued a statement stating that the classification is irrelevant for its objectives in the middle of this discussion. The DOJ has recently brought innovative charges in the cryptocurrency field that are independent of how a digital asset is categorized using the wire fraud statute, 18 U.S.C. 1343, a legislation with historical roots extending back to the 1800s.

The mail fraud statute, which was passed in 1872 to address mail fraud, served as the model for the wire fraud statute and is substantially similar. Due to the wire fraud act, all modes of communication, including email, text messages, and social media, are now covered by the law, in addition to the mail and telephone. The wire fraud act generally bans the use of a wire transmission to collect money or property through a fraud scheme, which is frequently performed through false claims or promises.

The statute is flexible and not subject matter-specific. It has been used by prosecutors in cases involving spoofing, insider trading, and other types of market manipulation. The tool is effective for prosecutors.

During the first half of 2022, under the wire fraud statute, DOJ was prosecuting cases. The trend is expected to continue and expand into other areas of financial fraud such as market manipulation and corporate disclosure cases. As crypto turns popular, prosecutors have responded with wire fraud, one of DOJ’s oldest tools.

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