Senate Dems Slam DOJ’s Decision to Axe Crypto Unit as a ‘Free Pass’ For Criminals

U.S. Deputy Attorney General Todd Blanche is beneath fireplace from Senate Democrats following his current determination to slender the Department of Justice’s (DOJ) crypto enforcement priorities and disband its crypto enforcement squad.

In a Thursday letter to Blanche, six Senate Democrats — Sens. Mazie Hirono (D-Hawaii), Elizabeth Warren (D-Mass.), Dick Durbin (D-Ill.), Sheldon Whitehouse (D-R.I), Chris Coons (D-Del.) and Richard Blumenthal (D-Conn.) — blasted his determination to reduce the National Cryptocurrency Enforcement Team (NCET) as “giv[ing] a free pass to cryptocurrency money launderers.”

The Senators referred to as Blanche’s directive that DOJ employees not pursue instances in opposition to crypto exchanges, mixers or offline wallets “for the acts of their end users” or deliver felony prices for regulatory violations in instances involving crypto, together with violations of the Bank Secrecy Act (BSA), “nonsensical.”

“By abdicating DOJ’s responsibility to enforce federal criminal law when violations involve digital assets, you are suggesting that virtual currency exchanges, mixers, and other entities dealing in digital assets need not fulfill their [anti-money laundering/countering the financing of terrorism] obligations, creating a systemic vulnerability in the digital assets sector,” the lawmakers wrote. “Drug traffickers, terrorists, fraudsters, and adversaries will exploit this vulnerability on a large scale.”

In his memo to DOJ employees on Monday night, Blanche cited U.S. President Donald Trump’s January government order on crypto, which promised to deliver regulatory readability to the crypto trade, as the explanation for his determination.

“The Department of Justice is not a digital assets regulator,” Blanche wrote, including that the company 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 urged DOJ employees to focus their enforcement efforts on prosecuting criminals who use “victimize digital asset investors” or those that use crypto within the furtherance of different felony schemes, like organized crime, gang financing, and terrorism.

Read extra: DOJ Axes Crypto Unit As Trump’s Regulatory Pullback Continues

For the Senate Democrats, nevertheless, Blanche’s declare doesn’t fairly reduce the mustard.

“You claim in your memo that DOJ will continue to prosecute those who use cryptocurrencies to perpetrate crimes. But allowing the entities that enable these crimes — such as cryptocurrency kiosk operators — to operate outside the federal regulatory framework without fear of prosecution will only result in more Americans being exploited,” the lawmakers wrote.

The lawmakers urged Blanche to rethink his determination to dismantle NCET, calling it a “critical resource for state and local law enforcement who often lack the technical knowledge and skill to investigate cryptocurrency related crimes.”

New York Attorney General Letitia James raised related considerations in her personal letter to Congress on Thursday, urging lawmakers to move federal laws to regulate the crypto markets. Though her letter itself made no point out of Blanche’s memo or the shuttering of NCET, a press launch from her workplace highlighted that her letter “comes after the [DOJ] announced the dismantling of federal criminal cryptocurrency fraud enforcement, making a robust regulatory framework all the more critical.”