U.S. senators are raising concerns and questioning Deputy Attorney General Todd Blanche's decision to shut down the Department of Justice's (DOJ) cryptocurrency unit, the National Cryptocurrency Enforcement Team (NCET). The NCET was created in 2021 to address and prosecute criminal misuse of cryptocurrencies and digital assets.
Critics argue that dismantling the NCET and shifting away from crypto enforcement priorities could enable illicit activities such as sanctions evasion, drug trafficking, scams, and child sexual exploitation. A letter penned by six Democratic senators, including Senator Elizabeth Warren, rebuked Blanche's decision to disband the crypto enforcement team, calling it a "grave mistake" that would give "a free pass" to crypto money launderers. The senators specifically took issue with the DOJ's announcement that it would "no longer target" crypto exchanges and mixing services.
These senators argue that mixers are often used by cybercriminals, including North Korean hackers, to launder stolen crypto assets, as well as by drug traffickers and those trading child sexual abuse material. The senators stated that it made "no sense" for the DOJ to take a "hands-off approach" to tools used to support such crimes. They also criticized the DOJ's decision to no longer prosecute digital asset crimes and Bank Secrecy Act violations, calling it "similarly nonsensical". The senators believe that this creates a systemic vulnerability in the digital assets sector that will be exploited by criminals on a large scale.
Deputy Attorney General Blanche, who previously served as President Donald Trump's defense lawyer, directed the shutdown of the DOJ's crypto litigation division, aligning with the current administration's more lenient approach to crypto regulation. Blanche issued a memo stating that the NCET would be disbanded effective immediately. The memo was framed in the context of an executive order signed by President Trump, titled "Strengthening American Leadership in Digital Financial Technology". The DOJ will no longer pursue litigation or enforcement actions that have the effect of superimposing regulatory frameworks on digital assets while President Trump's actual regulators do this work outside the punitive criminal justice framework.
Some suggest that the DOJ will focus exclusively on terrorists and drug traffickers who misuse cryptocurrency, rather than examining the platforms that enable such activities. The Market Integrity and Major Frauds Unit will cease cryptocurrency enforcement to focus on other priorities, such as immigration and procurement frauds. The Criminal Division's Computer Crime and Intellectual Property Section (CCIPS) will continue to provide guidance and training to Department personnel and serve as liaisons to the digital asset industry.
Concerns have also been raised about potential conflicts of interest, as Deputy Attorney General Blanche reportedly held cryptocurrency investments valued between $159,000 and $485,000 when he took office. These holdings included Bitcoin, Solana, Ethereum, Cardano, and stock in Coinbase, a major cryptocurrency exchange. Ethics experts and former federal officials have questioned whether Blanche's personal investments influenced his policy decisions regarding cryptocurrency enforcement.
