Cryptocurrency fraud unit shut down by Justice Department
Trump signs order establishing strategic Bitcoin reserve
President Trump signed an order Thursday to create a federal Strategic Bitcoin Reserve, signaling new federal support for cryptocurrency in general and Bitcoin in particular.
Scripps News
WASHINGTON – The Justice Department has shut down its unit that investigates cryptocurrency fraud “effective immediately,” even as the Trump administration ramps up its embrace of the emerging digital currency market, according to a memo by Deputy Attorney General Todd Blanche.
In a memo sent Monday night, Blanche directed the closure of the National Cryptocurrency Enforcement Team and ordered prosecutors to pivot to investigating transnational criminal organizations and terrorist groups that use crypto to engage in illicit transactions.
The move is one of several efforts by the Trump administration to scale back enforcement of white-collar and financial crimes and divert the resources to fighting drug traffickers and immigration-related human smugglers.
In his four-page memo, Blanche said the new order was meant to bring the Justice Department in line with Trump’s own Executive Order 14178, which decreed that clarity and certainty regarding enforcement policy “are essential to supporting a vibrant and inclusive digital economy and innovation in digital assets.”
Blanche, one of several Trump criminal defense lawyers at the top ranks of DOJ, said the president “has also made clear that ‘[w]e are going to end the regulatory weaponization against digital assets.’ “
“The Department of Justice is not a digital assets regulator,” Blanche wrote. “However, the prior Administration used the Justice Department to pursue a reckless strategy of regulation by prosecution, which was ill conceived and poorly executed.”
Created in 2022 to address the challenges posed by cryptocriminals
The National Cryptocurrency Enforcement Team (NCET) was established in February 2022 to address the challenge posed by the criminal misuse of cryptocurrencies and digital assets.
According to its website, the team is comprised of attorneys from across the Justice Department, including prosecutors with backgrounds in cryptocurrency, cybercrime, money laundering and forfeiture. It worked in close collaboration with components across the DOJ, as well as U.S. Attorneys’ offices around the country and FBI crypto-crime specialists.
One of its primary focuses was prosecuting the criminal use of digital assets with a particular focus on virtual currency exchanges and other entities that facilitate criminal activity. It also set strategic priorities regarding digital asset technologies and led the DOJ’s efforts to coordinate with domestic and international law enforcement partners, regulatory agencies and private industry to combat the criminal use of digital assets.
Letting Trump’s ‘actual regulators do this work’
The deputy AG said the Justice Department 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.”
Instead, Blanche wrote, the DOJ will focus its investigations and prosecutions involving digital assets on going after individuals “who victimize digital asset investors” and those who try to use crypto to further criminal schemes like terrorism, narcotics and human trafficking, organized crime, hacking, and cartel and gang financing.
Consistent with that narrowing of its cryptocurrency enforcement policy, the DOJ Market Integrity and Major Frauds Unit will also cease cryptocurrency enforcement to focus on other administration priorities, including immigration and procurement fraud, Blanche said.
Also, the DOJ Criminal Division’s Computer Crime and Intellectual Property Section will continue to provide guidance and training to Department personnel and serve as liaisons to the digital asset industry, according to Blanche’s memo.
Making the U.S. the ‘crypto capital of the planet’
President Donald Trump‘s executive order on cryptocurrency on Jan. 23 – his third day in office – sought to jumpstart government regulation that he said could help make the U.S. “crypto capital of the planet.”
On the campaign trail, Trump courted major players in the cryptocurrency sphere and promised to scale back what he considered to be overenforcement and regulation of the industry. That won him significant campaign contributions from digital currency firms and investors, many of whom had complained about what they said were aggressive efforts by the Biden administration to regulate the emerging market.
Trump also co-founded the World Liberty Financial firm two months before his election victory in November, along…
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