Latest news with #NationalCryptocurrencyEnforcementTeam
Yahoo
08-05-2025
- Business
- Yahoo
Justice Department shuts down its cryptocurrency fraud unit
WASHINGTON – The Justice Department has shut down its unit that investigates cryptocurrency fraud 'effective immediately,' even as the Trump administration ramps up its embrace of the emerging digital currency market, according to a memo by Deputy Attorney General Todd Blanche. In a memo sent Monday night, Blanche directed the closure of the National Cryptocurrency Enforcement Team and ordered prosecutors to pivot to investigating transnational criminal organizations and terrorist groups that use crypto to engage in illicit transactions. The move is one of several efforts by the Trump administration to scale back enforcement of white-collar and financial crimes and divert the resources to fighting drug traffickers and immigration-related human smugglers. In his four-page memo, Blanche said the new order was meant to bring the Justice Department in line with Trump's own Executive Order 14178, which decreed that clarity and certainty regarding enforcement policy "are essential to supporting a vibrant and inclusive digital economy and innovation in digital assets." Blanche, one of several Trump criminal defense lawyers at the top ranks of DOJ, said the president 'has also made clear that '[w]e are going to end the regulatory weaponization against digital assets.' " 'The Department of Justice is not a digital assets regulator,' Blanche wrote. 'However, the prior Administration used the Justice Department to pursue a reckless strategy of regulation by prosecution, which was ill conceived and poorly executed.' Public corruption and transnational crime experts warned that shutting down the unit could divert critical resources from efforts to stop criminals and corrupt regimes from using cryptocurrency for illicit gain, even as Trump claims he wants to crack down on them. "Dangerous US adversaries rely on cryptocurrencies to launder money and evade sanctions," said Nate Sibley, an anti-corruption expert and director of the Kleptocracy Initiative at the conservative Hudson Institute think tank in Washington, D.C., in a post on X "If this is accurate, hard to see how it squares with – for example–cracking down on cartel finances or maximum pressure sanctions on Iran." Created in 2022 to address the challenges posed by cryptocriminals The National Cryptocurrency Enforcement Team (NCET) was established in February 2022 to address the challenge posed by the criminal misuse of cryptocurrencies and digital assets. According to its website, the team is composed of attorneys from across the Justice Department, including prosecutors with backgrounds in cryptocurrency, cybercrime, money laundering and forfeiture. It worked in close collaboration with components across the DOJ, as well as U.S. Attorneys' offices around the country and FBI crypto-crime specialists. One of its primary focuses was prosecuting the criminal use of digital assets with a particular focus on virtual currency exchanges and other entities that facilitate criminal activity. It also set strategic priorities regarding digital asset technologies and led the DOJ's efforts to coordinate with domestic and international law enforcement partners, regulatory agencies and private industry to combat the criminal use of digital assets. Letting Trump's 'actual regulators do this work' The deputy AG said the Justice Department will no longer pursue litigation or enforcement actions that have the effect of superimposing regulatory frameworks on digital assets 'while President Trump's actual regulators do this work outside the punitive criminal justice framework.' Instead, Blanche wrote, the DOJ will focus its investigations and prosecutions involving digital assets on going after individuals "who victimize digital asset investors" and those who try to use crypto to further criminal schemes like terrorism, narcotics and human trafficking, organized crime, hacking, and cartel and gang financing. Consistent with that narrowing of its cryptocurrency enforcement policy, the DOJ Market Integrity and Major Frauds Unit will also cease cryptocurrency enforcement to focus on other administration priorities, including immigration and procurement fraud, Blanche said. Also, the DOJ Criminal Division's Computer Crime and Intellectual Property Section will continue to provide guidance and training to Department personnel and serve as liaisons to the digital asset industry, according to Blanche's memo. Making the U.S. the 'crypto capital of the planet' President Donald Trump's executive order on cryptocurrency on Jan. 23 – his third day in office – sought to jumpstart government regulation that he said could help make the U.S. 'crypto capital of the planet.' On the campaign trail, Trump courted major players in the cryptocurrency sphere and promised to scale back what he considered to be overenforcement and regulation of the industry. That won him significant campaign contributions from digital currency firms and investors, many of whom had complained about what they said were aggressive efforts by the Biden administration to regulate the emerging market. Trump also co-founded the World Liberty Financial firm two months before his election victory in November, along with his three sons and the wealthy real estate businessman Steve Witkoff, who is now Trump's Middle East envoy. Trump issued his own crypto token Trump also issued his own crypto token just before taking office, which soared to more than $10 billion in market value, and enthusiasm over his crypto-friendly administration helped briefly lift Bitcoin and other cryptocurrencies to record levels. Trump's so-called "memecoin" surged from less than $10 on the Saturday before his inauguration to as high as $74.59 before eventually giving up some of its gains. The token, branded $TRUMP, has been criticized by ethics experts as a conflict of interest for the president since the company could likely benefit from his pro-crypto policies. Since taking office, Trump has pushed pro-cryptocurrency efforts, including establishing a Digital Asset Markets working group to propose new digital asset regulations and to look into creating a national cryptocurrency stockpile. Creating a Strategic Bitcoin Reserve Last month, Trump signed an order to create a federal Strategic Bitcoin Reserve, signaling new federal support for cryptocurrency in general and Bitcoin in particular. Its members included Treasury Secretary Scott Bessent, White House A.I. and Crypto Czar David Sacks, along with "heads of other relevant departments and agencies," including the chairman of the Securities and Exchange Commission. As a result, cryptocurrencies like Bitcoin will likely become more mainstream and possibly used for payment, just like credit and debit cards. This article originally appeared on USA TODAY: Cryptocurrency fraud unit shut down by Justice Department
Yahoo
19-04-2025
- Business
- Yahoo
Unpacking the DOJ's Crypto Enforcement Memo
Earlier this month, the Department of Justice disbanded its National Cryptocurrency Enforcement Team and said it would no longer pursue what Deputy Attorney General Todd Blanche described as "regulation by prosecution." You're reading State of Crypto, a CoinDesk newsletter looking at the intersection of cryptocurrency and government. Click here to sign up for future editions. The U.S. Department of Justice "will no longer pursue litigation or enforcement actions that have the effect of superimposing regulatory frameworks on digital assets" in lieu of regulatory agencies putting together their own frameworks for overseeing the sector, a 4-page memo signed by Deputy Attorney General Todd Blanche on April 7 said. In other words, the DOJ will no longer pursue "regulation by prosecution," the memo said. The DOJ's memo raised concerns that it may mean criminal activities in the crypto sector would not be prosecuted, or at least prosecuted as heavily as it was under the past several years — both by disbanding the National Cryptocurrency Enforcement Team (NCET) and by shifting the entity's priorities. At a practical level, the memo itself is internal guidance but may not be a binding document. Multiple attorneys told CoinDesk they interpreted the guidance to indicate that the DOJ would still bring fraud or other criminal cases involving crypto, but would try to avoid any cases where the DOJ itself had to determine if a digital asset was a security or a commodity. "Fraud is still fraud," said Josh Naftalis, a partner at Pallas Partners LLP and a former prosecutor with the U.S. Attorney's office for the Southern District of New York. "This memo does not seem to say the DOJ is not going to prosecute fraud in the crypto space." Still, the memo raised alarms for prominent Democrats who questioned whether the DOJ was suggesting it would let criminal conduct occur. Senators Elizabeth Warren, Mazie Hirono, Richard Durbin, Sheldon Whitehouse, Christopher Coons and Richard Blumenthal wrote a letter to Blanche, saying his "decision to give a free pass to cryptocurrency money launderers" and shut down the NCET were "grave mistakes that will support sanctions evasion, drug trafficking, scams and child sexual exploitation." "Specifically, the Department will 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 — except to the extent the investigation is consistent with the priorities articulated in the following paragraphs," the DOJ memo said, a passage the Senators' letter referenced. New York Attorney General Letitia James wrote an open letter to Senate leaders in the same week asking them to advance legislation to address cryptocurrency risks. She did not specifically reference Blanche's memo but detailed possible ways to better police the sector through legislation. Katherine Reilly, a partner at Pryor Cashman and a former prosecutor with the U.S. Attorney's Office for the Southern District of New York, told CoinDesk that most of the major crypto cases brought by the DOJ in recent years would not have been affected had this guidance been in effect. The BitMEX case in 2020, when the DOJ and Commodity Futures Trading Commission brought unregistered trading and other charges against the platform, is "probably closest to the line" of being a case that may not have been brought under this guidance, she said. Trump pardoned BitMEX, its founders and a senior employee in late March, barely two weeks before the DOJ memo was shared. "I think that it's clear that the Justice Department wants to limit the DOJ's role in regulating the crypto industry … looking beyond its role in other crimes, fraud, laundering proceeds from narcotics trafficking, things like that, and sort of take a step back from the role of trying to bring order and fairness to the crypto industry as a whole," Reilly said. That's "probably the intent behind the BitMEX pardons too," she said. Naftalis said the DOJ will continue to pursue drug, terrorism or other illicit financing charges even under the memo. "I think that the headline for the industry is to the extent that there are legal uses of crypto, they're not going to set the guard rail by criminal enforcement," he said. "That's for Congress." One section of the memo tells prosecutors not to charge Bank Secrecy Act violations, unregistered securities offering violations, unregistered broker-dealer violations or other Commodity Exchange Act registration violations "unless there is evidence that the defendant knew of the licensing or registration requirement at issue and violated such a requirement willfully." Carla Reyes, an Associate Professor of Law at SMU Dedman School of Law, told CoinDesk that this may be referencing recent cases where developers build tools under the impression that they were not committing unlicensed money transmitting activities under existing guidance but may get charged anyway. "Most criminal statutes require some level of knowledge to define your intention, and knowledge that you're committing a crime when you do it," she said. "The further away you get from that, the lesser the charge, but the more willful [and] intentional it is, the higher the charge." What the memo seems to want to explicitly move away from is any suggestion that federal prosecutors would interpret how securities or commodities laws might apply to digital assets. "Prosecutors should not charge violations of the Securities Act of 1933, the Securities Exchange Act of 1934, the Commodity Exchange Act, or the regulations promulgated pursuant to these Acts, in cases where (a) the charge would require the Justice Department to litigate whether a digital asset is a 'security' or 'commodity,' and (b) there is an adequate alternative criminal charge available, such as mail or wire fraud," the memo said. A popular critique leveled against former SEC Chair Gary Gensler by the crypto industry was that he was "regulating by enforcement," rather than focusing on developing guidance for the industry to know what was or wasn't acceptable. Blanche seems to be referring to a similar critique in the memo, Naftalis said, in that one-off enforcement decisions by the SEC or DOJ should not define the guardrails for the industry. Steve Segal, a shareholder at Buchalter, said that some of the DOJ's past cases would charge trading venues for failing to police their own customers. The memo now seems to suggest that if a crypto exchange's executives were running a clean platform, and customers were laundering funds derived from criminal activities, the executives would not be charged. This is in contrast with, for example, FTX, where the executives were charged and convicted of (or pled guilty to) fraud charges. "Of course, a lot of the big crypto cases we've seen over the last few years are sort of pure investor fraud, things like FTX. And one of the more interesting things about this memo is it talks about crypto investors and really prioritizing cases where crypto investors are being victimized," Reilly said. "And so I don't think we should conclude that this memo means we're going to see a lot fewer cases in the crypto space, or that crypto companies can sort of breathe a sigh of relief that the DOJ is out of the picture for a few years." The DOJ's future cases may appear a bit different in terms of the specific allegations made, but "it's much too soon to say that everybody can assume the DOJ is out of the crypto business," she said. Many of the attorneys speaking to CoinDesk agreed that the memo itself did not clarify all of the different issues that may come up with a criminal case, nor was it an end-all/be-all document. The memo announced prosecutorial discretion but it isn't itself a law, Reyes said, adding that it may guide internal decision-making about which cases to pursue the most heavily, as well as the strategies that guide those prosecutions. A lot of details about how this memo ties together with Trump's executive order on the strategic bitcoin reserve still need to be spelled out, Segal said. Sections on victim compensation and how seized funds should be handled in the memo do not explain how the DOJ might handle situations where seized funds are turned over to bankruptcy estates, such as what happened with FTX or other similar scenarios. "I think we'll really have to see how it plays out, because this guidance, I do think, leaves prosecutors a lot of room to bring cases even of these kinds of violations that are being cast as more regulatory," Reilly said. "So even if that's the intent, I think the devil is in the details on what cases we see going forward." : Jesse Hamilton took a look at the number of Washington, D.C.-based crypto lobbyist groups now active. : Ivan Turogin and Sergei Potapenko, who were extradited from Estonia to the U.S. on charges tied to the HashFlare Ponzi scheme, await sentencing after pleading guilty to one conspiracy charge each earlier this year. Though they're under a court order to not travel before their sentencing, they received an email from the Department of Homeland Security telling them to self-deport, seemingly by mistake. : Kraken cut 400 roles last October, which at the time was about 15% of its workforce. It's since continued shedding jobs, Ian Allison reports. : A group of Republican Attorneys General have filed to pause a lawsuit against the Securities and Exchange Commission alleging its crypto enforcement actions intruded into state regulators' remits. : Zero Edge founder Richard Kim was arrested this week on wire and securities fraud charges after allegedly losing "nearly all" of the $7 million he raised from his investors. Kim told CoinDesk last year that he had gambled over $3.6 million of his investors' funds away. Monday The Securities and Exchange Commission and Binance were set to file a joint status report on their discussions after a judge paused the regulator's case against the exchange and its affiliated entities and executives in February. Last Friday, the parties asked for an extension of this deadline, and the judge overseeing the case signed off on Monday, giving the parties until mid-June to file a follow-up. () Binance executives met with U.S. Treasury Department officials in March about potentially "loosening U.S. government oversight" of the exchange following Binance's November 2023 guilty plea, the Journal reported. Binance agreed to a court-appointed monitor as part of the plea. At the same time as last month's discussions, Binance was in talks with the Trump-backed World Liberty Financial to develop a dollar-pegged stablecoin. () Fortune spoke to and profiled Bo Hines, the executive director of U.S. President Donald Trump's digital assets advisory council. () U.S. importers are seeing more "canceled sailings" due to a drop in demand as a result of tariffs, CNBC reports. () ICERAID claims to be a protocol on Solana where people can crowdsource images of "criminal illegal alien activity" in exchange for tokens, but it does not appear to have any connection to Immigration and Customs Enforcement (ICE), The Verge reports. () The Department of Homeland Security is revoking parole for a number of migrants, telling them to self-deport from the U.S. U.S. citizens, born within the U.S., are also receiving these emails. () Acting IRS Commissioner Gary Shapley has been replaced after just three days on the job, after Treasury Secretary Scott Bessent reportedly complained to President Donald Trump that he was not consulted on Shapley's promotion, which was pushed by Elon Musk. If you've got thoughts or questions on what I should discuss next week or any other feedback you'd like to share, feel free to email me at nik@ or find me on Bluesky @ You can also join the group conversation on Telegram. See ya'll next week!
Yahoo
17-04-2025
- Business
- Yahoo
Department of Justice shuts down National Cryptocurrency Enforcement Team
April 9 (UPI) -- The Department of Justice ended its National Cryptocurrency Enforcement Team, while also redirecting focus away from targeting crypto fraud. Deputy Attorney General Todd Blanche sent a memo Monday announcing that the Justice Department will "no longer pursue litigation or enforcement actions that have the effect of superimposing regulatory frameworks on digital assets" as President Donald Trump has "actual regulators do this work outside the punitive criminal justice framework." The memo said that in accordance with Executive Order 14178, the Justice Department will 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," and that the "National Cryptocurrency Enforcement Team shall be disbanded effective immediately." The Justice Department further ordered the Market Integrity and Major Fraud Unit to shift its focus fully away from cryptocurrency fraud and instead make immigration and procurement fraud a priority. Under the Trump administration, the Securities and Exchange has dropped multiple investigations into cryptocurrency platforms. In March, Trump also signed an executive order that established a strategic bitcoin reserve along with a U.S. digital asset stockpile. Rep. Gerry Connolly, D- Va., who is the Ranking Member of the Committee on Oversight and Government Reform, sent a letter in March to Department of Treasury Secretary Scott Bessent that the creation of such a reserve "provides no discernible benefit to the American people but would significantly enrich the President and his donors." "Holders of cryptocurrency include the President, his family, and his closest allies," he said. "The Trump Organization maintains significant ownership" in the World Liberty Financial cryptocurrency venture.
WIRED
11-04-2025
- Business
- WIRED
The US Is Turning a Blind Eye to Crypto Crimes
Apr 11, 2025 2:29 PM Under the Trump administration, federal authorities are declining to charge crypto firms with a range of offenses, raising questions about which rules apply—and who will enforce them. US deputy attorney general Todd Blanche has disbanded a DOJ team focused on cryptocurrency-related crimes. Photograph:If you buy something using links in our stories, we may earn a commission. Learn more. Since President Donald Trump took office, US authorities have increasingly abdicated responsibility for policing crypto-related offenses. Attorneys and lawmakers fear the resulting enforcement vacuum could be used to violate rules with impunity. While running for office, Trump repeatedly declared himself a champion of bitcoin, and members of his family have become thoroughly entangled with the crypto industry. Over the past few months, his administration has set about unravelling Biden-era crypto enforcement policies thread-by-thread, defanging the civil enforcement division that previously targeted the crypto industry and pardoning crypto executives who had pleaded guilty under the previous regime. Now, the Department of Justice is retreating from crypto enforcement as well. On Monday evening, in a letter addressed to all DOJ employees, deputy attorney general Todd Blanche announced that the agency would deprioritize certain criminal prosecutions against crypto businesses, including failures to prevent money laundering and obtain money transmission licenses. As part of the change, the DOJ will disband its National Cryptocurrency Enforcement Team (NCET), a unit that specializes in investigating crypto-related criminality. 'The prior administration used the Justice Department to pursue a reckless strategy of regulation by prosecution, which was ill conceived and poorly executed,' the letter stated. 'The Department will 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.' The DOJ will continue to prosecute individuals who use crypto in crimes including terrorism, drug trafficking, hacking, and other high-priority offenses. But the agency's new stance implies that crypto businesses will be allowed to play fast and loose with certain statutes, at least until regulators come out with a rulebook for the industry, experts say. 'The rollbacks send the message that they are really not going to prosecute people for crypto-related crimes or regulatory violations unless it involves something severe,' claims Christopher LaVigne, a former US prosecutor and partner at law firm Withers. 'The hope is that we get more clarity—a workable system that prevents fraud, protects consumers and allows the field to innovate. The fear is what happens in the vacuum.' The DOJ did not respond immediately to a request for comment. The DOJ's deprioritization of crypto enforcement follows a similar retreat by the Securities and Exchange Commission, the financial regulator that pursued the crypto industry most doggedly under former president Joe Biden, which has recently withdrawn from multiple cases filed against high-profile crypto firms. 'The dismantling of the SEC enforcement program is mammoth,' one former SEC staffer told WIRED in February. Elsewhere, the SEC has distanced itself from oversight of memecoins, a class of crypto coin that typically has no strict purpose but to act as a vehicle for financial speculation, which are frequently abused to squeeze money from unwitting investors. Shortly before the inauguration, Trump and his wife Melania launched memecoins of their own. In late March, the president pardoned the cofounders of crypto exchange BitMEX, who in 2022 pleaded guilty to charges relating to their failure to maintain an adequate anti-money-laundering program, a move that followed the pardoning of Silk Road creator Ross Ulbricht, whose case had become a cause celebré in crypto circles. A month after Chinese entrepreneur Justin Sun announced he had invested $75 million in World Liberty Financial, a crypto project with ties to the Trump family, the SEC petitioned a federal judge to pause its ongoing fraud case against him and several of his companies. (A status report on the case is expected to be submitted this spring.) Meanwhile, the Trump family's crypto empire continues to expand. In late March, Eric Trump and Donald Trump, Jr., the president's sons, announced a new bitcoin mining venture. Shortly before that, the parent company of Truth Social, Trump's social media platform, entered an agreement to launch a series of crypto exchange-traded funds. President Trump himself has previously issued NFTs, in addition to his memecoin. At least until July, by which time the US government's new 'working group on digital assets' is required to recommend an approach to overseeing the crypto industry, it will remain unclear which laws and regulations will be enforced against crypto businesses—and by whom. 'There was a pretty clear sheriff in town: [former SEC chair Gary] Gensler. Now there's not,' says LaVigne. Though the new DOJ orders do not prohibit prosecutors from investigating crypto businesses, the practical realities of the job—the way budget is allocated, how investigations are staffed, the possibility that supervisors may decline to proceed with a case—mean they achieve a similar result, says Daniel Silva, another former prosecutor and attorney at law firm Buchalter. 'If I'm a prosecutor, I'm not sure I'm interested,' says Silva. 'If I'm doing long-term, complex financial investigations involving international fraud, I can manage three or four at a time. Am I going to spend years on a [crypto] case that might get declined?' The upshot is likely to be that crypto firms are left alone to pursue experimental types of crypto tokens, transactions or products, even if they stretch the limits of applicable laws. 'If you're a cryptocurrency company right now, you have a bit more certainty that over the next couple of years your risk tolerance might expand without getting punished as much as it would have,' says Silva. In a letter to the DOJ on Thursday, six Democrat senators argued that a loosening of the grip on platforms responsible for the flow of crypto assets will lead to dangerous downstream outcomes, too. 'Drug traffickers, terrorists, fraudsters, and adversaries will exploit this vulnerability on a large scale,' the letter states. The DOJ's position may not, though, be the free pass that it seems, claims Joshua Naftalis, a former prosecutor who is currently a partner at law firm Pallas Partners. Although the DOJ is likely to pursue only few crypto-related cases under Trump, he says, businesses cannot be assured that present day infractions will not be punished by future administrations. That should temper the crypto industry's willingness to flout, say, anti-money laundering requirements. 'I'm sure it's a breath of relief for the crypto industry,' says Naftalis. 'But there's a statute of limitations. A different president could always go back and charge these cases. It would be a false sense of security.' Equally, the DOJ will continue to draw a hard line at fraud, the former prosecutors claim. 'You cannot just commit flagrant financial crimes and expect no one to look at it,' says Silva. There is a degree to which all parties—from crypto businesses to the prosecutors tasked with these new orders—will be required to read between the lines. 'The signal is that the industry is not in the doghouse anymore,' says Naftalis. 'They still have to comply with the laws. The question is which ones will be enforced—and by whom?'
Yahoo
09-04-2025
- Business
- Yahoo
Department of Justice shuts down National Cryptocurrency Enforcement Team
April 9 (UPI) -- The Department of Justice ended its National Cryptocurrency Enforcement Team, while also redirecting focus away from targeting crypto fraud. Deputy Attorney General Todd Blanche sent a memo Monday announcing that the Justice Department will "no longer pursue litigation or enforcement actions that have the effect of superimposing regulatory frameworks on digital assets" as President Donald Trump has "actual regulators do this work outside the punitive criminal justice framework." The memo said that in accordance with Executive Order 14178, the Justice Department will 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," and that the "National Cryptocurrency Enforcement Team shall be disbanded effective immediately." The Justice Department further ordered the Market Integrity and Major Fraud Unit to shift its focus fully away from cryptocurrency fraud and instead make immigration and procurement fraud a priority. Under the Trump administration, the Securities and Exchange has dropped multiple investigations into cryptocurrency platforms. In March, Trump also signed an executive order that established a strategic bitcoin reserve along with a U.S. digital asset stockpile. Rep. Gerry Connolly, D- Va., who is the Ranking Member of the Committee on Oversight and Government Reform, sent a letter in March to Department of Treasury Secretary Scott Bessent that the creation of such a reserve "provides no discernible benefit to the American people but would significantly enrich the President and his donors." "Holders of cryptocurrency include the President, his family, and his closest allies," he said. "The Trump Organization maintains significant ownership" in the World Liberty Financial cryptocurrency venture.
