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US Senators Question Deputy AG on Crypto Unit Closure over DOJ
US Senators Question Deputy AG Over Crypto Unit Shutdown Amid Rising Crime
In a dramatic hearing that has captured the attention of the crypto and legal communities alike, six U.S. senators are pressing Deputy Attorney General Todd Blanche over his controversial decision to disband the Department of Justice’s National Cryptocurrency Enforcement Team. The scrutiny comes amid a surge in illicit crypto activity throughout 2025, raising concerns that the DOJ’s move could have inadvertently created a loophole for criminal activity.
Blanche’s decision to dissolve the specialized crypto task force in April 2025 has become a focal point for lawmakers, especially given that he reportedly held substantial amounts of cryptocurrency at the time. The senators argue that this presents a potential conflict of interest that may have influenced his judgment.
Background: The DOJ’s Crypto Enforcement Team
The National Cryptocurrency Enforcement Team was established in 2022 under the Biden administration and quickly became a key player in high-profile investigations. Among its notable cases was the probe into Binance and its founder, Changpeng CZ Zhao, who eventually pleaded guilty in 2023 for violating U.S. anti-money-laundering regulations.
The task force’s mission was clear: to provide focused oversight of the burgeoning cryptocurrency market, ensuring compliance with U.S. financial laws and preventing misuse for criminal purposes. However, just months after Donald Trump assumed office in 2025 with a pro-crypto agenda, Blanche decided to dismantle the unit, arguing that the DOJ should not act as a digital assets regulator and criticizing the prior administration’s approach as reckless regulation by prosecution.
Senators Challenge Blanche’s Motives
While Blanche defended his actions as a policy decision, senators Mazie K. Hirono, Elizabeth Warren, Richard Durbin, Sheldon Whitehouse, Christopher Coons, and Richard Blumenthal have taken issue with the timing of the shutdown. According to their findings, Blanche declared ownership of crypto assets worth between $158,000 and $470,000 — primarily Bitcoin and Ethereum — just days before Trump’s inauguration on January 21, 2025.
By February 10, Blanche had committed to divesting these assets, yet he continued to oversee the DOJ’s crypto strategy for nearly two months, including issuing the memo scaling back the enforcement team on April 7. The senators contend that this raises serious questions about Blanche’s motivations, noting that his personal financial interests may have influenced his decision-making.
The fact that you held substantial amounts of cryptocurrency at the time you made this decision calls into question your own motivations, the senators wrote in a letter addressed to Blanche on January 28. They went on to suggest that his actions could potentially violate 18 U.S.C. § 208(a), a law designed to prevent government officials from participating in matters that could impact their personal financial interests.
Rising Crypto Crime Spurs Concerns
The controversy surrounding the DOJ’s decision is amplified by the surge in illicit crypto activity in 2025. According to research by TRM Labs, crypto-related crimes reached a record high of $158 billion, representing an astonishing 145% increase compared to 2024. During the same year, nearly 150 separate hacks led to losses of $2.87 billion, affecting investors, businesses, and crypto platforms worldwide.
Senators have warned that dismantling the enforcement unit could exacerbate this trend, making it easier for criminals to exploit gaps in oversight. These are grave mistakes that will support sanctions evasion, drug trafficking, scams, and child sexual exploitation, the senators noted in their prior April 10 letter to Blanche. It makes no sense for the DOJ to announce a hands-off approach to tools that are being used to support such terrible crimes.
The increase in crypto crime is largely attributed to the use of digital assets by sanctioned entities, but all categories of illicit activity, including fraud, ransomware attacks, and theft, have seen substantial growth.
The Political Angle
Blanche’s decision has also sparked debates over policy direction. Critics argue that the move reflects the Trump administration’s pro-crypto stance, potentially prioritizing market growth over regulatory oversight. Supporters, however, contend that excessive regulation by prosecution could stifle innovation in the rapidly evolving crypto sector.
The ongoing inquiry highlights the delicate balance between fostering innovation in emerging technologies and ensuring that these technologies are not exploited for criminal purposes. With lawmakers closely watching the DOJ’s next steps, the cryptocurrency community is left uncertain about the future of federal oversight in the United States.
What Comes Next
The senators’ letter, joined by six prominent lawmakers, underscores the urgency of re-evaluating the DOJ’s approach to cryptocurrency enforcement. With illicit crypto activity showing no signs of slowing down, the government faces mounting pressure to either reinstate the specialized enforcement team or develop an alternative mechanism to safeguard the financial system.
As the investigation continues, Todd Blanche may be called upon to testify further regarding his motivations, timing, and potential conflicts of interest. Meanwhile, investors, regulators, and law enforcement agencies alike are watching closely, knowing that the decisions made in the coming months could shape the future of crypto regulation in the United States.
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2026-02-02 · 2 days ago0 08
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