Lawmakers Criticize DOJ's Dismantling of Crypto Enforcement Team Amid 45% Fraud Surge

US Democratic lawmakers, led by Senator Elizabeth Warren, have expressed strong disapproval of the Department of Justice's (DOJ) decision to disband its National Cryptocurrency Enforcement Team (NCET).

In a letter dated April 10, the group voiced concerns that this move could hinder efforts to combat the rising criminal activities associated with digital assets. The NCET, which was disbanded on April 7, was established to address criminal activities within the digital asset sector by bringing together specialists from various DOJ divisions focused on cybercrime and money laundering.

The NCET was instrumental in several high-profile crackdowns, including actions against Tornado Cash and cybercriminals linked to North Korea. Deputy Attorney General Todd Blanche defended the decision, stating that it allows the DOJ to focus more on individual offenders rather than treating the entire crypto industry as a threat. He emphasized that the agency is not a financial regulator and aims to avoid broad-brush enforcement tactics.

New guidance from the DOJ reportedly encourages less scrutiny on crypto exchanges, wallets, and mixers unless they are directly linked to criminal behavior. Blanche stated that the goal is to prioritize targeted prosecutions over sweeping investigations.

Despite these explanations, lawmakers argue that dismantling the NCET poses significant risks. They contend that the task force played a crucial role in assisting local and state authorities, many of whom lack the resources or expertise to tackle complex crypto crimes. Without federal support, enforcement against threats such as sanctions evasion, drug trafficking, and online scams could weaken significantly.

The lawmakers highlighted that crypto fraud surged to $5.6 billion in 2023, a 45% increase from the previous year, according to FBI data. They argued that this underscores the need for a specialized federal unit to hold bad actors accountable, including crypto ATM operators and other enablers of illicit finance.

The letter called on the DOJ to reverse its decision, labeling it a misguided shift that undermines crime prevention. The lawmakers also requested a detailed staff briefing by May 1, 2025, to explain the rationale behind the change. They further questioned whether political considerations, particularly President Donald Trump’s known involvement with various crypto projects, played any role in the DOJ’s decision.

The lawmakers concluded that the decision to dismantle the NCET raises concerns about the DOJ's priorities and the potential influence of political interests on law enforcement strategies. They emphasized the importance of maintaining a specialized unit to combat crypto-based crimes effectively.