Key Takeaways
- The U.S. Department of Justice has disbanded the National Cryptocurrency Enforcement Team.
- The Department of Justice will now pursue digital asset cases, focusing primarily on terrorism-related crimes.
- The move is part of sweeping pro-crypto moves under President Donald Trump aimed at rolling back what his administration views as the Biden administration’s regulatory overreach.
The US Department of Justice (DOJ) has announced it will disband the crypto enforcement team, which consisted of prosecutors who specifically targeted crypto-related crimes.
According to a memo from Deputy Attorney General Todd Blanche quoting President Donald Trump’s pledge to “end the regulatory weaponization” of the cryptocurrency industry, the team will instead redirect its energies towards immigration enforcement, terrorism, and drug trafficking. The Deputy AG stated:
“The Department of Justice is not a digital assets regulator […] however; the prior administration used the Justice Department to pursue a reckless regulation strategy by the prosecution.”
Critical To the Nation’s Economic Development and Innovation
The memo sent to the Department of Justice employees said the crypto enforcement team (NCET) “shall be disbanded effective immediately.” Blanche previously represented US President Donald Trump in the 2024 criminal proceedings that led to his conviction on at least 34 felony charges after being found guilty of falsifying business records. The Deputy AG said, “The digital assets industry is critical to the nation’s economic development and innovation.” Blanche wrote in the memo:
“The Justice Department will no longer pursue litigation or enforcement actions that have the effect of superimposing regulatory frameworks on digital assets […] prosecutors should not charge regulatory violations in cases involving digital assets.”
Investigations Inconsistent with Order Closed
The move to disband the national crypto enforcement team is part of the DOJ’s effort to comply with President Trump’s January executive order that calls for the administration to protect and promote “the ability of individual citizens and private-sector entities alike to access and use for lawful purposes open public blockchain networks without persecution,” among other crypto-related objectives. As a result, Blanche stated that the DOJ officials would “no longer target virtual currency exchanges, mixing and tumbling services, and offline wallets for the acts of their end users or unwitting violations of regulations,” among other instructions. Blanche further stated that any ongoing investigations inconsistent with the President’s executive order would be closed.
The digital asset industry has long complained that innocent actors within its ranks were unfairly targeted under the Biden administration with either criminal or civil enforcement actions. Crypto industry insiders who opposed a criminal case against the developers of Tornado Cash, a crypto tumbler that hides ownership details of digital currencies, have recently celebrated the outcome of the proceedings.
Opposing the ongoing criminal case against the developers behind Tornado Cash, a tumbler used to hide ownership of crypto assets, has been a celebrated cause among some privacy and crypto enthusiasts. Commenting on Blanche’s memo, Peter Van Valkenburgh, the executive director of the advocacy group Coin Center, said on X:
“We should be going after bad guys. Not the developers of good tools that bad guys happen to use.”
Focus on other Priorities
The National Crypto Enforcement Team was created during President Joe Biden’s administration to target exchanges, mixers, and others “enabling the misuse of cryptocurrency and related technologies to commit or facilitate criminal activity.” However, with the new development, those entities will no longer be targeted for “the acts of their end users or unwitting violations of regulations.” Saying the disbandment of the crypto enforcement team was effective immediately, Blanche added that the Market Integrity and Major Frauds Unit “will cease cryptocurrency enforcement to focus on other priorities, such as immigration and procurement fraud.”
Conclusion
Once a vowed crypto skeptic, Trump pledged during his presidential campaigns to make the US the world capital of crypto. He and his sons have also sought to expand their fortunes with various crypto-related enterprises. Under the new order of things, the DOJ will narrow its focus to pursuing an illegal activity that causes “financial harm to digital asset investors and consumers” and supports cartels, drug traffickers, and designated “terrorist” groups. Blanche said:
“For example, cartels and human trafficking and smuggling rings have increasingly turned to digital assets to fund their operations and launder the proceeds of their illicit businesses.”
Even as they pursue criminal elements, Blanche said his prosecutors “will not pursue actions against the platforms that these enterprises utilize to conduct their illegal activities.”
Frequently Asked Questions (FAQs)
What is the national crypto enforcement team?
The unit, known as NCET, launched in February 2022 as part of the administration’s bid to combat fraud and illicit finance. It investigated, prosecuted, and addressed the challenge posed by the criminal misuse of cryptocurrencies.
Why are governments interested in regulating crypto?
Governments have been racing to adequately regulate cryptocurrency for years because the relative anonymity of digital coins and payments has attracted nefarious actors who think that they can not only commit a crime without their identity becoming known but also extract payment for it.
What is an example of a case pursued by the NCET?
In 2022, the CNET investigated and coordinated cases, including one against Binance and its founder Changpeng Zhao, who pleaded guilty to violating laws designed to prevent money laundering.
