As DOJ Shutters Crypto Enforcement Team, Regulatory Questions Ensue
In a bold move aimed at unshackling the cryptocurrency realm from the staunch regulatory oversight that governs domestic financial institutions, the United States Justice Department (DOJ) recently announced a decision to officially disband its National Cryptocurrency Enforcement Team (NCET), redirecting prosecutors to shift the focus of future crypto-related investigations to strictly those involving sanctions evasion, drug cartels and terrorist organizations. A memo from Deputy Attorney General Todd Blanche, issued on April 7th, 2025, conveys the intended actions of the DOJ which signal a rather significant shift away from the Biden-era protocol of stifling digital asset innovation through aggressive prosecution. This decision aligns with President Donald Trump’s vision to make the United States the global leader in cryptocurrency, fostering an environment where entrepreneurs and investors can thrive without fear of government overreach – but also opening the door for potential abuse of a market widely viewed as already lacking in transparency.
The NCET was a hallmark of the Biden administration’s heavy-handed approach to crypto. Established in 2022, the agency was enacted to address the threats posed by criminal misuse of cryptocurrencies and other related digital assets. The NCET is comprised of attorneys operating across the DOJ, and included a number of prosecutors with unique backgrounds, many of which having previous experience navigating through the cryptocurrency sector, as well as for prosecuting cyber-crime, money laundering and forfeiture cases. Since its inception, the agency most heavily targeted crypto-exchanges, wallets, and privacy-centric third-party services such as blenders and mixers, and saw success in prosecuting crimes committed in this space. Most notably, the unit played a central role in the high-profile investigation into crypto-staple Binance and its founder, Changpeng Zhao, who ultimately pleaded guilty in 2023 to violating U.S. anti-money laundering laws, resulting in a $4.3 billion settlement.2
Preceding the unit’s shuttering, crypto advocates had long criticized NCET for controversial decisions to levy penalties against specific platforms over the illicit activities of their user pool. The unit boasted a lengthy history of punishing companies for technical violations rather than intentional wrongdoing on their part, including issuing penalties to crypto startups – often offering their services to clientele across the globe – whose platforms had been misused by bad actors or individuals located in high-risk jurisdictions, as well as countries subject to U.S. sanctions.
All told, NCET’s disbandment will effectively see the DOJ no longer pursue charges against exchanges, dealers, mixing services and offline wallet providers “for the acts of their end users” nor for “unwitting violations of regulations”, this according to the memo issued late last Monday by Deputy Attorney General Blanche. The memo heavily criticized the staunch approach of the previous administration to try to thwart crypto-related crimes, calling their measures a “reckless strategy of regulation by prosecution,”1 which had suffocated a budding industry under the guise of consumer protection. By dissolving the NCET, the Justice Department is now prioritizing more tangible threats to national security – such as fraud, terrorism, and drug trafficking – over vague regulatory infractions that many have argued should be handled by regulatory agencies like the SEC, not federal prosecutors. As part of the latest action, the Market Integrity and Major Frauds Unit will also cease all cryptocurrency enforcement efforts, and NCET prosecutors have been instructed to close ongoing investigations that do not align with these new priorities.2
This pivot reflects Trump’s campaign promise to end the “war on crypto” and create a fertile ground for growth and development of blockchain technologies. The move adds to a growing list of other crypto-friendly initiatives led by the new administration to date, including the establishment of a Strategic Bitcoin Reserve and U.S. Digital Asset Stockpile in March. The administration’s actions thus far extend well beyond the walls of the DOJ. The U.S. Securities and Exchange Commission (SEC) has also dropped over a dozen crypto cases to date, and domestic banking regulators have begun ease restrictions that once unfairly “de-banked” crypto startups. Supporters of crypto-development view these changes are a lifeline to an industry that has faced a barrage of scrutiny over security concerns catapulted by the high-profile collapse of crypto-firm FTX in 2022 which the Biden administration used as a pretext to clamp down on legitimate businesses. Unlike the prior administration’s one-size-fits-all crackdown, the Trump DOJ appears to be focusing solely on criminals who willfully exploit crypto for crimes like market manipulation or money laundering, leaving law-abiding innovators and the average investor with less worry.
Critics of deregulation however argue that scaling back enforcement places consumers at elevated risk. In this case however, Blanche’s memo clarifies that the DOJ isn’t abandoning oversight altogether – it is simply refining it. Through this initiative, the DOJ has reaffirmed its commitment to disrupting illicit digital asset flows while promoting financial innovation to some extent. Prosecutors will still pursue those who defraud investors or enable criminal enterprises, but they will also reduce resources wasted on investigations into individuals and firms who gave been inadvertently caught in regulatory gray zones. This nuanced approach protects consumers while respecting the decentralized ethos of crypto, where innovation has often outpaced regulation.
The Deputy Attorney General’s memo can be read in its entirety here.
Citations
1. “MEMORANDUM FOR ALL DEPARTMENT EMPLOYEES – Ending Regulation by Prosecution.” S. Department of Justice, Office of the Deputy Attorney General , 7 Apr. 2025.
2. Sigalos, MacKenzie. “DOJ Ends Crypto Enforcement Team, Shifts Focus to Terrorism and Fraud.” CNBC, CNBC, 8 Apr. 2025.