Justice Department Scales Back Cryptocurrency Enforcement (2)

The US Justice Department will limit the kinds of cryptocurrency crimes it will investigate and prosecute, specifically focusing on those related to terrorism, drug cartels, victimizing investors and other limited categories.

The change was announced in a memo that Deputy Attorney General Todd Blanche issued late Monday.

Blanche said the reforms are intended to move the Justice Department away from investigating and prosecuting crypto-related activities that fall under the purview of regulators.

“The Department of Justice is not a digital assets regulator,” Blanche wrote in the memo. “However, the prior administration used the Justice Department to pursue a reckless strategy of regulation by prosecution, which was ill-conceived and poorly executed.”

As part of the changes, the National Cryptocurrency Enforcement Team has been disbanded. The department also plans to close existing cryptocurrency investigations that don’t align with the administration’s priorities, Blanche wrote.

“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” of the administration, according to the memo.

The memo also directs prosecutors to pursue cases that involve investors being defrauded. The kinds of investigations that prosecutors will prioritize involve stealing or misappropriating money on exchanges, digital asset investment scams and hacking attacks against exchanges.

The department also will prioritize cases involving the use of digital assets to enable crimes by drug cartels, transnational criminal organizations, terrorist financing and human smuggling.

The Justice Department said it will no longer bring cases involving unintentional violations of the Bank Secrecy Act, that contain unregistered broker dealer violations and other registry requirements under the Commodity Exchange Act.

Fortune reported earlier on the memo.

In a letter dated Apr. 7, digital-asset executives including Matt Huang of crypto venture fund Paradigm, Brian Armstrong of Coinbase, Arjun Sethi of Kraken, Kyle Samani of Multicoin Capital and the Winklevoss twins of Gemini expressed their “collective concern” at the Justice Department’s approach to crypto enforcement.

“The Biden DOJ’s approach raises concerns about the rule of law, and chills innovation,” they wrote in the letter, which was addressed to White House AI and crypto czar David Sacks and seen by Bloomberg News. “We urge the Trump Administration to protect the rights of American blockchain and crypto developments.”

The letter was issued under the letterhead of the DeFi Education Fund, an advocacy group that lobbies on behalf of the decentralized finance industry.

“We are heartened to see that the DOJ announced it is redirecting resources to prosecuting the bad actors who are actually culpable for misuse of technology rather than the builders of our financial future,” the group’s Executive Director and Chief Legal Officer Amanda Tuminelli said in an emailed statement on Tuesday.

Kraken declined to comment. Representatives for Coinbase and Gemini did not immediately return requests for comment.

“This issue is foundational for the crypto industry,” the chief legal officer at Paradigm, Katie Biber, said. “Developers should not be sent to prison for building neutral tools. Laws have to mean what they say, not what prosecutors wish they said. We are thrilled to see progress on this issue and look forward to further positive momentum.”

The White House did not immediately return a request for comment.

Read More: Crypto VC Activity Slow to Catch Up to Friendlier US Environment

(Updates with details on the letter sent by crypto executives starting in the eleventh paragraph, and a comment from Paradigm in the sixteenth paragraph.)

--With assistance from Teresa Xie.

To contact the reporters on this story:
Chris Strohm in Washington at cstrohm1@bloomberg.net;
Muyao Shen in New York at mshen118@bloomberg.net

To contact the editors responsible for this story:
Sara Forden at sforden@bloomberg.net

Misyrlena Egkolfopoulou, stacy-marie ishmael

© 2025 Bloomberg L.P. All rights reserved. Used with permission.