The U.S. Department of Justice is disbanding its National Cryptocurrency Enforcement Team (NCET), directing prosecutors to focus cryptocurrency investigations primarily on criminal activities involving drug cartels and terrorist groups, according to an internal memo obtained by Reuters.
The memo, issued by Deputy Attorney General Todd Blanche on Monday night, criticized the previous administration’s approach to regulating the digital asset sector, calling it a “reckless strategy of regulation by prosecution.” Blanche pointed out that the efforts to tackle fraud and illicit finance under former President Joe Biden’s administration were overly aggressive.
The NCET, which was established in February 2022 to combat financial crimes in the crypto industry, had been involved in high-profile cases, including the investigation of Binance and its founder, Changpeng Zhao, who pleaded guilty to money laundering violations. However, under the leadership of President Donald Trump, who has expressed strong support for the cryptocurrency industry, the U.S. government is now shifting its stance.
Trump has long promised to make the U.S. the “crypto capital of the planet,” and his administration has begun reversing many regulatory actions aimed at the crypto industry. Blanche emphasized that the new focus will target “individuals who victimize digital asset investors” and those using digital assets to facilitate serious crimes such as terrorism, drug trafficking, human trafficking, hacking, and organized crime.
The memo further stated that any ongoing investigations that do not align with this new policy should be closed. A Justice Department spokesperson declined to comment on the matter.
Blanche’s directive draws on one of Trump’s executive orders, which advocates for ensuring that both individuals and private companies can access “open blockchain networks without persecution.” This order reflects Trump’s broader position on the crypto sector, which he has continued to support on the 2024 campaign trail, calling for a reduction in regulations.
Since Trump took office, regulatory efforts against the cryptocurrency industry have softened. For example, the U.S. Securities and Exchange Commission (SEC) has altered its approach to crypto enforcement, pausing or abandoning cases that were previously viewed as victories. Additionally, the U.S. banking regulator recently allowed banks to engage in certain crypto-related activities.
Blanche’s memo also directed that prosecutors cease targeting cryptocurrency exchanges, digital wallets, and services like mixers and tumblers, which help anonymize transactions, unless there is clear evidence of criminal intent. He clarified that regulatory violations should not be pursued unless there is proof of intentional misconduct, such as willful violations of licensing or registration laws.
Blanche, a former criminal defense attorney for Trump, was confirmed as Deputy Attorney General last month. His memo marks a significant shift in the Justice Department’s approach to cryptocurrency enforcement.
Trump and his family have a growing stake in the cryptocurrency sector. Reports have shown that the Trump family is entitled to 75% of the net revenue from token sales by World Liberty Financial, a crypto venture. Additionally, ahead of his inauguration, Trump launched a crypto token, and the companies behind the $TRUMP and $MELANIA “meme coins” have clarified that these tokens are not considered investments or securities but rather expressions of support.
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