Key Points:
- U.S. Deputy Attorney General Todd Blanche is facing backlash from Senate Democrats regarding the dissolution of DOJ’s crypto enforcement team.
- Senators assert that Blanche’s choice diminishes efforts against money laundering and exposes the digital asset landscape to threats.
Deputy Attorney General Todd Blanche has recently come under scrutiny from Senate Democrats due to a decision to shift the Department of Justice’s (DOJ) focus on crypto enforcement and dismantle its crypto enforcement unit.
In a letter from Thursday to Blanche, six Senators—Mazie Hirono (D-Hawaii), Elizabeth Warren (D-Mass.), Dick Durbin (D-Ill.), Sheldon Whitehouse (D-R.I.), Chris Coons (D-Del.), and Richard Blumenthal (D-Conn.)—criticized his move to cut the National Cryptocurrency Enforcement Team (NCET) as granting a ‘free pass’ to money launderers operating in cryptocurrency.
The letter expresses alarm over Blanche’s directive to not pursue cases against crypto exchanges and entities for the actions performed by end-users, categorizing this approach as “nonsensical.”
They emphasized that “by abdicating DOJ’s responsibility to enforce federal criminal law when violations involve digital assets, you are suggesting that virtual currency exchanges and other parties dealing in these assets need not follow their [anti-money laundering/countering the financing of terrorism] obligations, creating a systemic vulnerability in the digital assets space.”
In a memo to DOJ staff Monday evening, Blanche referenced President Donald Trump’s prior executive order on cryptocurrency as the reasoning behind his decision. He stated the DOJ would no longer engage in litigation that risks imposing regulatory structures on digital assets, suggesting that these should be managed outside of the criminal justice system.
Instead, he directed DOJ’s focus towards prosecuting individuals who exploit digital asset investors or use cryptocurrency to facilitate further criminal activity such as organized crime or terrorism.
For the Senate Democrats, Blanche’s assurances seem insufficient. They argue that allowing these entities to operate without oversight will lead to more exploitation of Americans.
Furthermore, they called on Blanche to reconsider dismantling the NCET, labeling it a crucial support for local law enforcement lacking the necessary expertise to tackle cryptocurrency-related crimes.
Support for these concerns was echoed by New York Attorney General Letitia James, who wrote to Congress on Thursday and urged for federal legislation to impose regulations on crypto markets.
