U.S. Senators Criticize DOJ for Shutting Down Crypto Crime Unit Amid Personal Conflicts

Summary:
Six U.S. senators have expressed their disapproval of Deputy Attorney General Todd Blanche's recent decision to shut down a specialized unit at the Department of Justice (DOJ) dedicated to cryptocurrency enforcement. They argue that the closure raises ethical concerns, especially considering Blanche's personal crypto holdings at the time of the decision.

Key Takeaways

Six senators filed a letter condemning Deputy Attorney General Todd Blanche for disbanding the National Cryptocurrency Enforcement Team (NCET).
Blanche had significant personal investments in cryptocurrencies when he initiated the shutdown in April 2025.
Concerns have been raised about potential conflicts of interest and violations of federal ethics laws.
The DOJ's new policy will focus on prosecuting individuals who directly harm crypto investors rather than pursuing cases against cryptocurrency exchanges and platforms.
Reports indicate a surge in illicit cryptocurrency activities in 2025, with significant increases in various crime categories.

U.S. Senators Criticize DOJ for Shutting Down Crypto Crime Unit Amid Personal Conflicts

Senators Call Out Conflict of Interest

In a critical letter dated January 28, 2026, Senators Mazie Hirono, Elizabeth Warren, Richard Durbin, Sheldon Whitehouse, Christopher Coons, and Richard Blumenthal expressed their concerns over Deputy Attorney General Todd Blanche's decision to dismantle the National Cryptocurrency Enforcement Team (NCET). This decision was made public in April 2025 when Blanche had considerable cryptocurrency holdings, which he had not yet divested.

Senators Call Out Conflict of Interest

The senators expressed their worries that this closure might reflect a conflict of interest and potentially violate federal ethics laws.

Background on the National Cryptocurrency Enforcement Team

Established in 2022 during President Biden's administration, the NCET was created to handle complex cryptocurrency crime investigations within the Department of Justice. The unit had been involved in significant cases, including the investigation into Binance and its founder, Changpeng “CZ” Zhao, who acknowledged violating U.S. anti-money-laundering laws in 2023.

In April 2025, a few months after Donald Trump took office, Blanche made the controversial decision to disband the NCET. His campaign involved strong support for the digital asset industry.

According to disclosures, Blanche held cryptocurrencies worth between $158,000 and $470,000, mostly in Bitcoin and Ethereum, just days before Trump’s inauguration. On February 10, he stated his intention to sell these assets “as soon as practicable.” However, he was confirmed as deputy attorney general on March 5 and issued a memo policy that significantly reduced crypto enforcement on April 7. Notably, he did not begin to dispose of his crypto holdings until late May.

Ethical Concerns Raised by Lawmakers

The senators highlighted that Blanche might have violated the federal law 18 U.S.C. 208(a), which prohibits executive branch officials from participating in decisions affecting their financial interests. This issue is currently under consideration by the Office of the Inspector General of the DOJ, with lawmakers urging Blanche to preserve all related documents and provide a detailed account of how this situation was handled.

New Policies from the DOJ

The memo issued on April 7, titled “Ending Regulation by Prosecution,” introduced a significant change in the DOJ's approach to digital assets. Blanche asserted that the DOJ is not a financial regulator and criticized previous enforcement actions as “regulation by prosecution.”

The updated policy directs prosecutors to target individuals who directly harm investors or use cryptocurrencies in crimes such as terrorism, drug trafficking, organized crime, and human trafficking. Importantly, the memo advised against pursuing cases against exchanges, mixers, and other platforms where users might commit crimes.

This new directive noted that investigations inconsistent with these new priorities should be halted, leading to the formal dissolution of the NCET.

The senators previously warned Blanche that reducing enforcement efforts would have serious ramifications. Their recent letter cited data revealing a dramatic increase in illicit cryptocurrency activities during 2025, with TRM Labs estimating $158 billion in illegal transactions—a nearly 145% rise from the prior year. This surge has been attributed in part to sanctioned entities, but all categories of crypto-related crimes, including violent crime and human trafficking, saw increases. In total, criminals stole about $2.87 billion through nearly 150 hacks throughout the year.