Cryptocurrency Crime: Can Traditional Law Keep Pace?

Cryptocurrency has drastically changed how people deal with money, making it possible to trade digital assets without traditional banks. In 2016, Decentralised Finance (DeFi) emerged, allowing users to lend and borrow, trade and exchange digital assets through blockchain networks and smart contracts.

However, this development also created new opportunities for crime, including fraud, money laundering, ransomware, theft, illegal money transfers, and market manipulation. The decentralized nature of DeFi platforms raises questions about whether traditional criminal law can handle crimes committed in this manner.

The court case United States v. Faiella (2014) established that Bitcoin could be considered 'money' under the law because it could be exchanged, used for payments, and transferred from one person to another. This precedent has been followed in subsequent cases, including United States v. Murgio (2016), where the court held that Bitcoin could be considered 'funds' under 18 U.S.C. §1960.

The case of Samuel Bankman-Fried's FTX exchange collapse is a notable example of how traditional fraud laws can be applied to cryptocurrency businesses. Bankman-Fried was convicted of wire fraud, conspiracy to commit wire fraud, and other crimes related to the misuse of customer funds.