Earlier this week, it was reported that INTERPOL had issued a Red Notice for crypto exchange Binance Chief Changpeng Zhao ("CZ"). This was quickly denied by CZ and Binance as an attempt to spread fear uncertainty and doubt.
On 27 March 2023, the United States Commodity Futures Trading Commission filed a complaint by way of a civil action for injunctive and other equitable relief and civil monetary penalties against CZ and Binance entities.
Red Notices
An INTERPOL Red Notice is a request sent to various law enforcement agencies around the globe to locate and provisionally arrest an individual prior to an extradition request being made. Although it appears that an INTERPOL Red Notice has not been issued in this case, Red Notices have previously been used to try and locate individuals allegedly involved with crypto.
Earlier, on 20 February 2023, Gherson's criminal litigation, investigations and regulatory team wrote a blog entitled "The United States charge Terraform Labs CEO Do Kwon in relation to crypto fraud".
This followed a previous blog titled "Crypto and INTERPOL – can INTERPOL issue a Red Notice in relation to allegations involving crypto?" , where we described how it was widely reported that South Korea had asked INTERPOL to issue a Red Notice for developer Do Kwon, who is the founder of the failed crypto currency Terra. An INTERPOL Red Notice can be used to prevent an individual fleeing prior to an extradition request being issued.
We then noted how it had been reported that the US Securities and Exchange Commission has charged Do Kwon and his company Terraform Labs with "orchestrating a multi-billion dollar crypto asset securities fraud".
We concluded that Do Kwon is reportedly still in hiding.
We then reported how Do Kwon had been located and arrested in Montenegro. Given that Do Kwon is wanted in several jurisdictions (including the United States), it will be very interesting to follow the next steps.
International dimension of offences involving crypto
As well as being at risk of INTERPOL measures, such as Red Notices, those who fear that allegations involving crypto have been made against them could also be at risk of extradition.
As was discussed in a previous blog entitled "Can I be extradited for allegations involving crypto?" and "Another US crypto extradition", due to the borderless nature of crypto transactions, any allegation of criminality will inevitably involve multiple jurisdictions. As such, there may be numerous jurisdictions asserting jurisdiction and trying to extradite an alleged perpetrator to their jurisdiction to face justice. Indeed, there have now been at least two examples of individuals being extradited to the US in relation to allegations involving crypto.
The vast majority (if not all) of criminal allegations that underpin a crypto criminal investigation are of a financial crime nature, e.g. fraud, money laundering and insider dealing. They can also include alleged offences relating to the breach of financial regulations.
These offences, by their very nature, can take place across multiple jurisdictions and are, therefore, types of offences for which multiple countries can assert jurisdiction, including in relation to conduct outside their own country (hence extradition can be an option).
Indeed, due to the borderless nature of the effect of these crimes, a jurisdiction could assert jurisdiction against an individual who has not even stepped foot in that jurisdiction.
As such, jurisdictions might additionally utilise INTERPOL to locate an individual and seek their arrest prior to issuing any extradition request.
Therefore, due to the nature of this technology, and as this technology becomes more prevalent, there will surely be a large increase in the instances of INTERPOL being used to locate individuals accused of allegations involving crypto.
International crypto dimension – criminal investigations, litigation and extradition
Those who fear they may be subject to an extradition request from the UK, or who are just concerned about liability across multiple jurisdictions including the UK, should get in touch.
Gherson's criminal litigation, regulatory and investigatory team combine an expert knowledge of criminal and regulatory law, underpinned with a firm understanding of digital assets and blockchain technology. As such, the team is able to provide expert strategic advice to anyone facing investigation in relation to any allegation of criminality involving cryptoassets. Working alongside the extradition team, Gherson's criminal litigation, investigations and regulatory team is able to provide an unparalleled service in any case with an international dimension. The team is also able to call upon lawyers in multiple other jurisdictions and build multi-jurisdictional teams to assist with any suitable defence.
INTERPOL, Red Notices and crypto
In addition, those who fear that a jurisdiction may have requested INTERPOL to process data relating to them involving any allegations of offences involving crypto, or are just concerned about potential liability, should get in contact.
Indeed, Gherson Solicitors continue to receive requests for expert advice and assistance from those who fear they may have outstanding financial issues arising. That advice tackles:
- How to best approach a possible INTERPOL red notice;
- Preparing for potential criminal proceedings / an extradition request;
- Preparing for a situation where a civil matter or commercial dispute could be used to initiate bogus criminal proceedings; and
- Even exploring the possibility of instigating civil litigation proceedings to recover any misappropriated assets.
Gherson have previously written a series of blogs designed to assist those who fear they might be subject to INTERPOL measures (including a Red Notice):
INTERPOL and Red Notice Challenges
How to Remove an INTERPOL Red Notice
INTERPOL Red Notices and Extradition
How do I know if I am subject to an INTERPOL Red Notice
Regulation and compliance
In these constantly changing times, firms that deal with cryptoassets, and additionally have exposure to firms that do, will need to carefully consider all their systems and controls to ensure that they are able to comply with all relevant AML and sanctions regulations.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.