Opinion by: Genny Ngai and Will Roth of Morrison Cohen LLP

Since taking office, the Trump administration has designated several drug and violent cartels as Foreign Terrorist Organizations (FTOs) and Specially Designated Global Terrorists (SDGTs). US President Donald Trump has also called for the “total elimination” of these cartels and the like. These executive directives are not good developments for the cryptocurrency industry. On their face, these mandates appear focused only on criminal cartels. Make no mistake: These executive actions will cause unforeseen collateral damage to the digital asset community. Crypto actors, including software developers and investors, may very well get caught in the crosshairs of aggressive anti-terrorism prosecutions and follow-on civil lawsuits.

Increased threat of criminal anti-terrorism investigations 

The biggest threat stemming from Trump’s executive order on cartels is the Department of Justice (DOJ). Almost immediately after President Trump called for the designation of cartels as terrorists, the DOJ issued a memo directing federal prosecutors to use “the most serious and broad charges,” including anti-terrorism charges, against cartels and transnational criminal organizations.

This is a new and serious development for prosecutors. Now that cartels are designated as terrorist organizations, prosecutors can go beyond the traditional drug and money-laundering statutes and rely on criminal anti-terrorism statutes like 18 U.S.C. § 2339B ...