A top New York prosecutor is sounding the alarm over what he says is a massive and largely unchecked crypto crime problem, urging state lawmakers to crack down on unlicensed digital asset businesses that are helping criminals move billions of dollars with little oversight.
Manhattan District Attorney Alvin Bragg warned that gaps in current regulations have allowed a $51 billion underground economy to flourish, with unlicensed crypto platforms being used to launder money tied to guns, drugs, fraud, and even terrorism.
Speaking Wednesday at New York Law School, Bragg said tightening crypto rules has become just as important as his office’s work on gun violence and organized retail theft.
Unlicensed Crypto ATMs Under Fire
Bragg placed particular focus on unlicensed crypto kiosks and Bitcoin ATMs, which he said have become an easy on-ramp for criminals looking to turn cash into digital assets without scrutiny.
According to Bragg, some of these machines charge fees of up to 20% while asking few — if any — questions about where the money comes from.
“These machines know exactly what’s happening,” Bragg said. “They know you’re laundering gun proceeds — and they do it anyway.”
He explained that criminals prefer these kiosks because they allow them to bypass traditional banks, which are required to flag suspicious activity.
Enforcement Isn’t Enough, Bragg Says
While prosecutors in Manhattan have successfully brought cases involving illegal Bitcoin ATMs and crypto-linked terror financing, Bragg said the current legal framework makes enforcement harder than it should be.
Too often, he noted, cases depend on criminals making obvious mistakes — like moving money through a regulated bank or bragging about their crimes online.
“We shouldn’t have to wait for someone to slip up,” Bragg said. “There are people far smarter than that.”
Call for Licensing and KYC Rules
To close those gaps, Bragg is pushing for mandatory licensing and know-your-customer (KYC) requirements for all crypto businesses operating in New York. Under his proposal, companies that transfer, trade, or facilitate digital assets would face criminal penalties if they operate without proper approval.
“If you’re running a crypto business, you should be licensed,” Bragg said. “It’s that simple.”
If lawmakers move forward, New York would become the 19th U.S. state to criminalize unlicensed crypto operations — a step supporters say would improve consumer protection and give prosecutors clearer authority to pursue fraud and money laundering cases.
Crypto Scams Targeting Seniors
During a Q&A session, Bragg also addressed concerns about elderly New Yorkers who have lost their life savings to so-called “pig-butchering” scams — long-term online schemes where victims are emotionally groomed before being persuaded to send crypto to scammers.
Bragg acknowledged how difficult it can be to recover stolen funds but pointed to proposed legislation, including Senator Zellnor Myrie’s R.I.P.O.F.F. Act, as a way to strengthen recovery options for victims.
A Broader Crackdown Underway
New York’s push comes as federal authorities are also stepping up enforcement nationwide.
Earlier this week, U.S. prosecutors in Massachusetts sought to seize $200,000 in USDT tied to a romance-based crypto scam. Overall, crypto fraud is becoming increasingly costly — scammers stole an estimated $9.9 billion in 2024, making it one of the largest financial crime waves of the year.
