On June 30, 2022, the Department of Justice (“DOJ”) announced four enforcement actions involving allegations of fraud in the cryptocurrency space. The enforcement actions, which collectively bring criminal charges against six individuals, demonstrate the breadth of potential conduct that may expose participants in the blockchain industry to regulatory and enforcement risk. In connection with these cases, the DOJ alleges a wide-ranging “rug pull” scheme related to non-fungible tokens (“NFTs”), a fraudulent investment fund trading on cryptocurrency exchanges, a Ponzi scheme involving the sale of unregistered cryptocurrency instruments, and a fraudulent initial coin offering. The announcement may also signal enhanced focus on potential cryptocurrency fraud in Central and Southern California, where three of the four cases were filed.
Click here to read Ropes and Gray’s Client Alert on the enforcement actions.