US DOJ Disbands Crypto Enforcement Unit

The U.S. Department of Justice (DOJ) has announced that it will no longer pursue criminal cases against crypto exchanges, developers, or users involved in regulatory violations.

This follows the disbanding of the National Cryptocurrency Enforcement Team (NCET), a specialized unit that focused on crypto-related criminal activities.

A Shift In Focus

In a memo sent to DOJ staff on Monday night, Deputy Attorney General Todd Blanche confirmed that the directive was effective immediately. The document was later shared via a Tuesday X post by Amanda Tuminelli, executive director of the DeFi Education Fund, a crypto lobbying group.

Blanche highlighted that the agency would no longer use its resources to control digital assets through criminal prosecution. “The Department of Justice is not a digital assets regulator,” he stated, adding that the previous administration’s “reckless strategy of regulation by prosecution” was ill-conceived and poorly executed.

The memo also explained that the DOJ would stop pursuing litigation or enforcement actions involving crypto exchanges, mixing services, and offline wallets for the actions of their end users or any unintentional regulatory violations.

Specifically, staff were instructed not to charge regulatory violations, such as those tied to the Bank Secrecy Act (BSA), unlicensed money transmission, or violations of federal securities and commodities laws in crypto-related cases.

Instead, the agency will now focus its efforts on prosecuting individuals who victimize digital asset investors or use cryptocurrency for criminal activities like terrorism, human trafficking, drug trafficking, and financial fraud.

The official also ordered the closure of ongoing investigations that do not align with this new policy. The DOJ will collaborate with its criminal division to ensure consistent enforcement.

NCET’s Involvement in High-Profile Crypto Cases

The NCET had been involved in several major crypto cases, including the prosecution of Tornado Cash, an Ethereum-based mixing service.

In 2023, the DOJ arrested Roman Storm, one of the platform’s developers, on charges of money laundering and sanctions violations. The case caused controversy, with Storm arguing that the platform did not intentionally aid criminal actors due to it being a permissionless service.

Another notable case involved the Samourai Wallet, a privacy-focused Bitcoin wallet accused of enabling unlicensed money transmission. Despite the product being a non-custodial service that does not control user funds, lawmakers claimed that its coin-mixing features were used to conceal illicit transactions.

This is not the first time a federal crypto task force has been disbanded under the current administration. In January, following an executive order by President Trump, the Commodity Futures Trading Commission (CFTC) also downsized its crypto-focused enforcement teams. This left only two groups to handle digital asset-related matters.