TLDR

• DOJ has disbanded its National Cryptocurrency Enforcement Team (NCET), citing “DOJ is not a digital assets regulator”
• Six Senate Democrats led by Elizabeth Warren criticized the decision as a “grave mistake” that would enable criminal activity
• Democrats claim the decision gives “a free pass to cryptocurrency money launderers” and creates vulnerabilities in the digital assets sector
• Critics connect the decision to Trump family cryptocurrency interests, including World Liberty Financial and American Bitcoin
• Deputy AG Todd Blanche indicated DOJ will focus on other priorities like immigration and procurement frauds instead

The Department of Justice has terminated its National Cryptocurrency Enforcement Team (NCET), sparking strong criticism from Senate Democrats who view the move as weakening efforts to combat cryptocurrency-related crimes. Deputy Attorney General Todd Blanche announced the decision on April 7, stating that “The Department of Justice is not a digital assets regulator.”

Six Senate Democrats, led by Senator Elizabeth Warren, sent a letter to Blanche on April 10 urging him to reverse the decision. The group, which included Senators Richard Durbin, Mazie Hirono, Sheldon Whitehouse, Christopher Coons, and Richard Blumenthal, called the move a “grave mistake” that would enable various criminal activities.

Democrats’ Concerns About Enforcement Gaps

The senators’ letter expressed particular concern that disbanding the crypto enforcement team would give “a free pass to cryptocurrency money launderers.” They argued that crypto mixing services, which obscure blockchain transactions, are “go-to tools for cybercriminals” that enable sanctions evasion, drug trafficking, and other illegal activities.

“It makes no sense for DOJ to announce a hands-off approach to tools that are being used to support such terrible crimes,” the letter stated. The lawmakers questioned why the Justice Department decided not to prosecute “a host of crimes involving digital assets, including violations of the Bank Secrecy Act.”

In the memo, Blanche directed DOJ staff to no longer pursue cases against crypto exchanges, mixers, or offline wallets “for the acts of their end users” or bring criminal charges for regulatory violations in cases involving crypto. Instead, he urged staff to focus on prosecuting criminals who “victimize digital asset investors” or those who use crypto for organized crime, gang financing, and terrorism.

Impact on Law Enforcement Capabilities

Since its creation in 2021, NCET has coordinated Department-wide efforts to prosecute illicit activity involving cryptocurrency, including cases involving hundreds of millions of dollars worth of digital assets. Critics argue that dismantling this specialized team creates a gap in enforcement expertise.

The senators claimed this creates a “systemic vulnerability in the digital assets sector,” which “drug traffickers, terrorists, fraudsters, and adversaries” will exploit. They requested a staff-level briefing no later than May 1 to provide “detailed information on the rationale behind these decisions.”

New York Attorney General Letitia James also expressed concerns, urging Congress to pass federal legislation to regulate crypto markets. Her letter highlighted that the DOJ’s decision to dismantle federal criminal cryptocurrency fraud enforcement makes “a robust regulatory framework all the more critical.”

Trump Family Connections Questioned

The Senate Democrats’ letter also raised concerns about potential conflicts of interest related to the Trump family’s cryptocurrency ventures. The lawmakers questioned whether “President Trump’s interest in selling his cryptocurrency may be the reason for easing law enforcement scrutiny.”

The Trump family has interests in the crypto platform World Liberty Financial and its token. The platform is also planning to launch a stablecoin. President Trump’s sons, Eric Trump and Donald Trump Jr., are working to establish a crypto-mining company called American Bitcoin.

In his memo announcing the disbandment, Blanche accused the Biden administration of using the Justice Department to “pursue a reckless strategy of regulation by prosecution.” The memo stated that the reassignment of NCET resources would allow the DOJ to “focus on other priorities, such as immigration and procurement frauds.”

The senators have urged Blanche to reconsider his decision, emphasizing that NCET has been a “critical resource for state and local law enforcement who often lack the technical knowledge and skill to investigate cryptocurrency related crimes.”

The disbanding of the crypto enforcement team comes as part of broader changes in regulatory approach under the Trump administration, which has promised to bring regulatory clarity to the crypto industry.

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