DOJ Shifts Focus: Goodbye Crypto Cops, Hello Terrorism and Fraud

The U.S. Department of Justice (DOJ) has made a seismic shift in its priorities, disbanding its National Cryptocurrency Enforcement Team (NCET) and redirecting its focus towards combating terrorism, fraud, and transnational organized crime. This move, announced in an internal memo by Deputy Attorney General Todd Blanche, marks a significant pivot from the aggressive crypto enforcement policies of the Biden administration. The DOJ’s new stance, which aligns with President Trump’s pro-crypto agenda, raises critical questions about the future of digital asset regulation and the potential risks and opportunities for investors.

The NCET, established in 2021 under the Biden administration, was a specialized unit tasked with investigating and prosecuting crypto-related crimes. Its disbandment signals a clear departure from the previous administration’s approach, which was characterized by a strategy of “regulation by prosecution.” Blanche’s memo explicitly states that the DOJ is “not a digital assets regulator,” condemning the prior administration’s tactics and redirecting the department’s efforts towards prosecuting individuals who harm digital asset investors, while barring cases against crypto exchanges, mixers, and offline wallets.



This shift is part of a broader recalibration of federal oversight under the Trump administration, which aims to create a more favorable environment for crypto innovation. The January 2025 executive order by President Trump mandates the creation of a federal framework for digital assets by July 2025, with the goal of delivering “regulatory clarity” for the industry. This move is expected to reduce legal uncertainty and promote innovation, potentially attracting more institutional and retail investment into the crypto space.

However, the DOJ’s new focus on terrorism, fraud, and transnational organized crime raises concerns about the potential for increased illicit activity in the crypto sector. The disbandment of the NCET means that there will be fewer resources dedicated to investigating and prosecuting crypto-specific crimes, such as money laundering and fraud. This could lead to a rise in illicit transactions, harming the sector’s reputation and potentially leading to stricter global regulations or sudden crackdowns.

The DOJ’s decision to stop targeting mixers like Tornado Cash, which was previously sanctioned for laundering over $1 billion, is a case in point. Without a dedicated team like the NCET, such threats may go unchecked, increasing risks of large-scale hacks or scams. Investors could face higher exposure to fraud or theft, especially in decentralized or unregulated sectors.

The DOJ’s shift in focus also raises questions about the potential for market volatility. The planned liquidation of 69,370 BTC (≈$6.5B) seized from Silk Road, for example, caused a price dip, though analysts expect the market to absorb it over months. Sudden sales of large institutional holdings could destabilize prices, especially if paired with reduced regulatory oversight.

Despite these risks, the DOJ’s new approach also presents opportunities for investors. The reduced regulatory scrutiny on legitimate crypto businesses could create a safer environment for investment, fostering growth in areas such as DeFi, NFTs, and blockchain startups. The DOJ’s focus on prosecuting bad actors, rather than the broader crypto industry, could also reduce the risk of arbitrary legal actions against legitimate businesses.

In conclusion, the DOJ’s decision to disband the NCET and shift its focus towards terrorism, fraud, and transnational organized crime presents a complex landscape for crypto investors. While the move towards regulatory clarity and reduced legal risks for legitimate businesses is welcome, the potential for increased illicit activity and market volatility cannot be ignored. Investors must navigate this new environment with caution, leveraging the opportunities presented by the pro-crypto regulatory climate while remaining vigilant against emerging threats. The success of Trump’s regulatory framework, due by July 2025, will be critical in determining the net impact on the market.