A senior New York prosecutor is urging state lawmakers to take a tougher stance on cryptocurrency crime, warning that regulatory gaps are allowing billions of dollars in illicit activity to flow through unlicensed platforms with little consequence.
Key Takeaways:
New York prosecutors warn unlicensed crypto platforms enable a $51 billion criminal economy. High-fee crypto ATMs are being used to launder illicit cash with minimal oversight. Lawmakers are being urged to mandate licensing and KYC for all crypto businesses.Speaking at New York Law School on Wednesday, Alvin Bragg, the Manhattan district attorney, called on legislators to criminalize unlicensed crypto operations, describing a “$51 billion criminal economy” that exploits weak oversight to launder proceeds from guns, drugs, fraud, and terrorism financing.
Bragg said closing those gaps has become a core priority alongside enforcement efforts targeting gun violence and organized retail theft.
New York Prosecutor Warns Unlicensed Crypto ATMs Fuel Money Laundering
Bragg focused heavily on unlicensed crypto kiosks and ATMs, which he said often charge fees as high as 20% to convert cash into digital assets while asking few questions about the source of funds.
According to Bragg, these machines have become a preferred tool for criminals seeking to move dirty money into crypto without interacting with regulated financial institutions.
“They know you’re laundering gun proceeds,” Bragg said during his remarks. “And they do it without necessarily asking you.”
While Manhattan prosecutors have successfully brought cases involving unlicensed Bitcoin ATM operations and terror financing schemes, Bragg warned that current laws force investigators to rely too often on criminals making mistakes.
He argued that enforcement should not depend on someone accidentally touching the traditional banking system or boasting about their crimes online.
“We shouldn’t need someone to slip up,” he said. “There are people far wiser than that.”
Bragg proposed mandatory licensing and know-your-customer requirements for all crypto businesses operating in New York, backed by criminal penalties for violations.
Any company involved in transferring, trading, or facilitating the movement of digital assets should be subject to the same baseline oversight, he said.
“If you are operating a crypto business, you should be licensed,” Bragg said. “It’s that simple.”
If adopted, the measure would make New York the 19th U.S. state to criminalize unlicensed crypto operations, according to Bragg.
Supporters argue such a move would strengthen consumer protections and give prosecutors clearer authority to pursue cases tied to fraud and money laundering.
New York Lawmakers Target “Pig-Butchering” Crypto Scams
During a question-and-answer session, concerns were raised about elderly New Yorkers who have lost life savings to so-called “pig-butchering” scams, where victims are groomed online before being convinced to send crypto to fraudulent addresses.
Bragg acknowledged the difficulty of recovering stolen funds and pointed to proposed legislation, including Senator Zellnor Myrie’s R.I.P.O.F.F. Act, as a way to expand recovery tools.
The push in New York comes as federal authorities also escalate enforcement.
Earlier this week, US prosecutors in Massachusetts sought the forfeiture of $200,000 in USDT linked to a romance-based crypto scam.
As reported, crypto scammers defrauded victims of at least $9.9 billion in 2024, marking one of the most significant financial crimes of the year.
The post New York Prosecutor Pushes to Criminalize Unlicensed Crypto Operations appeared first on Cryptonews.
