Democratic Lawmakers Criticize DOJ's Shutdown of National Cryptocurrency Enforcement Team

Democratic lawmakers have strongly criticized the Department of Justice's decision to shut down the National Cryptocurrency Enforcement Team, describing it as a misguided move that could potentially benefit criminal activities. The backlash follows a memo issued by Deputy Attorney General Todd Blanche on April 7, which formally disbanded the team. In the memo, Blanche argued that the DOJ is not a digital assets regulator and criticized the previous administration's approach to regulation through prosecution as reckless. He directed the DOJ staff to shift their focus towards prosecuting individuals who directly victimize digital asset investors, rather than targeting crypto exchanges, mixers, and offline wallets.

In response, Senator Elizabeth Warren, along with six other Senate Democrats, sent a letter to Blanche on April 10, urging the DOJ to reverse its decision. The lawmakers argued that reducing enforcement efforts could lead to an increase in sanctions evasion, drug trafficking, scams, and child exploitation, which are often facilitated by crypto mixing services designed to obscure the origins of illicit funds. They highlighted the NCET's role in handling significant crypto cases, such as the money laundering case against the cryptocurrency mixing platform Tornado Cash, and warned that disbanding the team would weaken law enforcement's ability to manage complex crypto cases.

The lawmakers also criticized the DOJ's decision to stop prosecuting violations of the Bank Secrecy Act, asserting that this move would undermine existing anti-money laundering protections and create vulnerabilities that could be exploited by criminals. They pointed out the NCET's successes since its formation in 2021, including high-profile convictions, multimillion-dollar asset seizures, and support provided to state and local agencies. The letter questioned whether President Donald Trump's crypto ventures influenced the DOJ's decision, given the scrutiny faced by Trump family-backed projects like World Liberty Financial, which has launched its own cryptocurrency and plans to introduce a stablecoin.

The lawmakers requested a staff-level briefing by May 1 to explain the rationale behind the DOJ's move and its potential impact on crypto-related criminal enforcement. They emphasized the importance of the NCET in fighting cryptocurrency-based crime and expressed concern that the DOJ's decision could be influenced by political interests. The letter underscored the need for continued enforcement efforts to protect digital asset investors and maintain the integrity of the financial system.