TLDR
- DOJ disbanded its National Cryptocurrency Enforcement Team, saying “The Department of Justice is not a digital assets regulator”
- Six Democratic senators wrote to Deputy AG Todd Blanche calling this a “grave mistake” that would enable crimes like sanctions evasion and scams
- Democrats questioned if Trump family crypto ventures influenced the decision to ease enforcement
- The crypto unit was established in 2021 and had been prosecuting illicit crypto activity
- Senators requested a staff-level briefing by May 1 to understand the rationale behind these decisions
Six Democratic senators have criticized the Department of Justice (DOJ) for disbanding its cryptocurrency enforcement team, describing the move as a “grave mistake” that could enable criminal activity. The decision, announced on April 7, has sparked debate about the government’s approach to regulating digital assets.
Deputy Attorney General Todd Blanche shut down the DOJ’s National Cryptocurrency Enforcement Team (NCET), stating in a memo that “The Department of Justice is not a digital assets regulator.” The team was originally established in 2021 to investigate and prosecute criminal misuse of cryptocurrencies and digital assets.
Senators’ Concerns
In an April 10 letter addressed to Blanche, Senator Elizabeth Warren led fellow Democrats Richard Durbin, Mazie Hirono, Sheldon Whitehouse, Christopher Coons, and Richard Blumenthal in urging the DOJ to reverse its decision. The group claimed that terminating the unit would support “sanctions evasion, drug trafficking, scams, and child sexual exploitation.”
The senators wrote that the decision gave a “free pass to cryptocurrency money launderers” and expressed concern about crypto mixing services, which they described as “go-to tools for cybercriminals.” These services are used to obfuscate blockchain transactions, potentially hiding the source of funds.
“It makes no sense for DOJ to announce a hands-off approach to tools that are being used to support such terrible crimes,” the senators stated in their letter. They requested a staff-level briefing no later than May 1 to provide detailed information about the rationale behind these decisions.
The lawmakers also questioned why the Justice Department had decided not to prosecute certain crimes involving digital assets, including violations of the Bank Secrecy Act. They argued this creates a vulnerability in the digital assets sector that could be exploited by various bad actors.
Trump Family Connection
The senators also raised concerns about potential conflicts of interest related to the Trump family’s cryptocurrency ventures. In a press release accompanying their letter, they questioned the “potential connections” between the DOJ’s actions and President Donald Trump’s crypto interests.
The Trump family has backed the crypto platform World Liberty Financial and its token. The platform is reportedly planning to launch a stablecoin, while President Trump’s sons, Eric Trump and Donald Trump Jr., are working to establish a crypto-mining company called American Bitcoin.
“Your decisions give rise to concerns that President Trump’s interest in selling his cryptocurrency may be the reason for easing law enforcement scrutiny,” the Democrats stated in their letter. This suggests they believe the decision might have been influenced by the president’s business interests.
NCET’s Track Record
Since its creation in 2021, the National Cryptocurrency Enforcement Team had worked with U.S. Attorneys’ offices to prosecute illicit activity involving cryptocurrency. This included cases involving hundreds of millions worth of digital assets.
Despite this record, Blanche’s memo stated that the disbandment of NCET will allow the DOJ to “focus on other priorities, such as immigration and procurement frauds.” This shift in priorities has drawn criticism from the Democratic senators.
In his memo announcing the enforcement team’s disbandment, Blanche accused the Biden administration of using the Justice Department to “pursue a reckless strategy of regulation by prosecution.” This suggests the current administration views the previous approach as overreaching.
The lawmakers have urged Blanche to reconsider these decisions, highlighting the importance of maintaining oversight in the cryptocurrency space. They believe that without proper enforcement, various criminal activities could flourish in the digital asset ecosystem.
As the crypto industry continues to evolve, the debate over appropriate regulation and enforcement will likely remain a key issue for lawmakers and government agencies alike.
Stay Ahead of the Market with Benzinga Pro!
Want to trade like a pro? Benzinga Pro gives you the edge you need in today's fast-paced markets. Get real-time news, exclusive insights, and powerful tools trusted by professional traders:
- Breaking market-moving stories before they hit mainstream media
- Live audio squawk for hands-free market updates
- Advanced stock scanner to spot promising trades
- Expert trade ideas and on-demand support
