Among the conclusions offered in “Cryptocurrency Enforcement Framework” issued by the Department of Justice this past fall (see generally R. Schwinger, “Blockchain Law: DOJ’s ‘Cryptocurrency Enforcement Framework’,” NYLJ (Jan. 15, 2021)) was the ominous warning that “cryptocurrency presents a troubling new opportunity for individuals and rogue states to avoid international sanctions and to undermine traditional financial markets, thereby harming the interests of the United States and its allies.” A spate of recent government enforcement action shows that the United States is not hesitating to tackle cryptocurrency activity being used to try to circumvent the prohibitions of U.S. economic sanctions.
The United States maintains a powerful system of economic sanctions as part of the tools it uses in international relations, such as under the International Emergency Economic Powers Act, 50 U.S.C. §§1701 et seq. (IEEPA). These sanctions target not just particular bad actors but also certain entire countries or regimes. Well-known examples of such sanctioned states include North Korea, Iran, Cuba, Venezuela, Crimea, Sudan and Syria. These sanctions are designed to cut off these countries from much of the modern financial system, as a means of U.S. leverage in international relations.
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