The US Department of Justice (DOJ) has started an overview of how victims of digital asset fraud are compensated, after concerns about outdated valuation methods.
According to a recent internal DOJ Memo, many investors have hit by crypto platform deposits, such as FTX, Celsius, Voyager, Genesis, Blockfi and Gemini Trust, only received reimbursement based on the value of their participations when they submitted claims, not with the current market rates.
Although not all these bankruptcies resulted from criminal prosecution, the DOJ emphasized that many assets were lost due to theft or fraud. As a result, investors missed considerable potential profit that they could have realized whether they had retained their crypto.
For the context, when FTX applied for bankruptcy in November 2022, Bitcoin acted less than $ 20,000. By January 2025, the value of the digital actively increased to more than $ 108,000, which represents an increase of more than 500%.
Nevertheless, creditors receive payouts in Fiat -Valuta based on the 2022 valuation. These reimbursements are far short of the current value of the assets, even with extra interest.
The DOJ acknowledged that the current regulations limit the recovery of the dollar value of actively at the time of fraud. The agency said that this approach effectively refuses the benefit of the appreciation of the active, despite the fact that the risk of loss has driven.
One FTX creditor -lawyer, ‘Mr. Purple ‘, the urgency of such reforms emphasized and noted that digital assets deserve legal recognition comparable to traditional financial instruments under bankruptcy legislation.
To tackle the issues, the Doj has charged the Office of Legal Policy and the Office or Legislative Affairs with the evaluation of potential legal and legislative updates. These changes can include reforms in the bankruptcy code, in particular to display the unique characteristics of digital assets.
Doj’s wider crypto -shift
This initiative is part of a broader strategic shift within the DOJ’s approach to digital assets.
Last week, CryptoSlate Reported that the Department has dissolved its National Cryptocurrency Enforcement Team (NCET), a unit that initially focused on investigating crypto-related crimes.
The DOJ said that staff want to concentrate on clear criminal activities such as scam and market manipulation, instead of investigating legal entities such as crypto exchanges, wallet providers or decentralized instruments.
Moreover, the DOJ actively participates in the working group of President Donald Trump on digital asset markets. The group was formed under executive order 14178 to assess the regulatory landscape of the crypto industry.
The DOJ will provide lawyers to help prepare proposals and recommendations for legislation and supervision of agencies. These recommendations will be drawn up to the president in a formal report, with the aim of modernizing the regulations of digital assets to adapt to national policy objectives.
As soon as the president approves the proposals, the DOJ has committed itself to the implementation of the recommended actions to guarantee better investor protection and more clarity for digital asset companies that are active in the US.