Crime & Punishment in the Crypto World
Cryptocurrency use is on the rise, and regulators have struggled to rein in illicit uses of this groundbreaking new technology. As crypto coins get more valuable and tech criminals grow more sophisticated, crypto-crimes have been on the rise. At this very moment, lawmakers worldwide are attempting to draft new rules addressing cryptocurrency crime. However, they are facing several unexpected issues in finding ways to regulate cryptocurrency and curb crypto-crime.
Halo Platform recognizes that cryptocurrencies will shape the future of our virtual lives. However, it’s important to stay safe when engaging in any online transaction. And when it comes to protecting your digital assets, knowledge is your best defense.
Cryptocurrencies Are a Legal Gray Area
Cryptocurrencies were invented by the as-yet unidentified Satoshi Nakamoto nearly a decade ago, and governments worldwide are still struggling to figure out how they fit into existing regulatory systems. Unfortunately, however, they are trying to fit a square peg in a round hole.
Consider the case of United States v. Zaslavskiy. In 2017, the United States Department of Justice filed a criminal complaint against Maksim Zaslavskiy alleging a conspiracy to commit securities fraud. Prosecutors allege Zaslavskiy held a fraudulent ICO by claiming that his coins were backed by actual real estate holdings in the real world. Later, Zaslavskiy issued a second ICO for another company that claimed their cryptocurrency was backed by diamonds. The government claimed that both ICOs were carried out with the intent of deceiving investors, as Zaslavskiy allegedly knew the companies held none of the real estate or diamonds they claimed to have.
Zaslavskiy wasn’t about go down without a fight, however. In his motion to dismiss the indictment, Zaslavskiy argues that current securities laws do not apply to cryptocurrency and token sales because cryptocurrency, as its very name suggests, deals with currency, not securities. Zaslavskiy also claimed that securities laws, as applied to cryptocurrencies, are void for vagueness. In other words, Zalavskiy’s defense was that cryptocurrencies are neither securities nor currencies, and thus he cannot be prosecuted under the regulations that apply to either.
Breaking New Ground
Although it remains to be seen whether Zalavskiy’s arguments will keep him out of federal prison, he does have a point. Cryptocurrencies don’t quite fit under any formal legal category, and similar jurisdictional issues are sure to arise as more government agencies begin prosecuting crypto-crimes. In fact, lawmakers are currently in a heated debate over whether Ether should be classified as currency, a commodity, a security, or something else entirely. Whatever they end up deciding, the coin’s classification will break new ground and shape the future of cryptocurrency regulation.
Some legal experts believe pre-existing laws can be interpreted broadly to make them apply to cryptocurrencies. Others, however, believe new and more precise laws must be written specifically addressing cryptocurrency and related crimes. Regardless of your position on this matter, it will be very difficult for lawmakers to make rules that apply to cryptocurrency until the technology itself has been formally defined. Given that this groundbreaking new invention is still evolving, it may be a long time before the crypto community sees a robust system of cryptocurrency regulation and crypto-crime enforcement.
All in all, the regulation of cryptocurrencies and enforcement against crypto-criminals is a brand-new field developed to address a revolutionary new invention. Although policymakers are trying to work it out, there are still a lot of bad actors taking advantage of the general lawlessness that we’ve seen in many cryptocurrency activities. As a result, it’s critical for cryptocurrency users to only put their assets in wallets and onto exchanges that they trust. Also, people using cryptocurrency-based applications need to stay safe while they are browsing online.
Halo Platform’s browser and wallet application, Featherlite, offers both of these benefits in one easy-to-use application. Featherlite is both a secure wallet for your digital coins and a safe browser that you can use to run decentralized applications, or “Dapps.” If you want to learn more about the security and convenience of Halo Platform’s Featherlite browser and wallet app, check out our media links below.
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