My previous article in February 2022 highlighted how DOJ could seek to use the wire fraud statute to prosecute rug pulls (i.e., take the money and run schemes), insider trading, and the market manipulation of digital assets. (See McGinley, “Expect indictments in the NFT space soon,” Reuters Legal News (Feb. 4, 2022)).
Since then, DOJ has used wire fraud to prosecute the first two rug pulls involving NFTs and to prosecute two digital asset insider trading cases. DOJ has not recently used wire fraud in a large-scale market manipulation case, but it is likely to be a next area of focus, given public reports of market manipulation and spoofing (creating orders with the intent to cancel) by crypto whales, who are individuals or entities that own substantial amounts of a particular cryptocurrency.
This article examines DOJ’s use of the wire fraud statute during the first half of 2022 and what to expect going forward.
‘Enforcement 40’ for 2020
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