DOJ Disbands National Cryptocurrency Enforcement Team

On April 7 Deputy Attorney General Todd Blanche disbanded the Justice Department’s National Cryptocurrency Enforcement Team and issued a memorandum redirecting federal crypto enforcement, ordering a pause or review of platform-focused investigations, moving crypto work out of the Market Integrity and Major Frauds Unit, and directing personnel and resources away from routine platform probes. The memorandum instructs prosecutors to prioritize investment fraud and instances where digital assets facilitate terrorism, drug trafficking, cartels, human trafficking, ransomware and hacking, and organized crime, and to treat intermediary liability as dependent on deliberate, complicit behavior rather than as a default theory. The directive signals that DOJ will defer more to financial regulators for rulemaking and supervision and will reserve criminal prosecution for actors and conduct that meet the newly stated priority categories. Blanche was confirmed in March 2025, signed an ethics agreement to divest crypto holdings within 90 days and to recuse from matters that could directly and predictably affect his financial interests, and held more than $150,000 in digital assets when the memorandum was issued, prompting ethics scrutiny and questions under federal conflict-of-interest statutes, including 18 U.S.C. 208, and recusal rules. Companies and legal teams are advised that platform-focused criminal risk is reduced but not eliminated, that DOJ will continue to prosecute intermediaries knowingly complicit in investor fraud or in facilitating the listed priority crimes, and that regulatory enforcement of AML, KYC, sanctions, registration, and the travel rule by FinCEN, OFAC, the SEC, and the CFTC will continue and may involve multi-agency coordination. Operational actions recommended to teams include auditing features and controls against the memo’s priority crimes, mapping abuse paths and documenting mitigations, strengthening fraud detection, disclosures, incident response, and investor remediation, maintaining engagement with SEC, CFTC, FinCEN, and OFAC, and tracking the status of DOJ matters to adjust litigation reserves, disclosures, and product roadmaps. Open issues to monitor include whether Blanche completed divestment within 90 days and honored recusal commitments, how many platform investigations will be reopened, closed, or redirected, and whether state attorneys general or foreign authorities will increase enforcement; internally DOJ will reallocate personnel and budgets, retrain prosecutors to apply investigative tools to prioritized crimes, and redeploy analytics toward national security targets. Markets and builders should expect near-term case review and reclassification activity, potential impacts on liquidity, listings, and banking access as legal overhangs change, continued compliance obligations under financial regulators, and an opportunity to harden controls, update disclosures, and resolve legacy exposures while monitoring a fluid enforcement environment. 

Source: https://web3businessnews.com/policy/doj-crypto-shift-blanche-scrutiny/

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