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DOJ Scrutiny: Deputy AG's Crypto Holdings Raise Concerns Amid Enforcement Team Closure

The recent decision by the Justice Department to dissolve its dedicated cryptocurrency enforcement team has sparked renewed scrutiny, particularly regarding Deputy Attorney General Todd Blanche's personal investments in digital assets.

A group of six US senators, led by Senator Mazie Hirono and joined by notable lawmakers like Elizabeth Warren and Richard Durbin, has demanded clarity on the potential conflicts of interest arising from Blanche's financial stakes.

In their letter, the senators requested documentation explaining the rationale behind the April 2025 disbanding of the National Cryptocurrency Enforcement Team (NCET) and its implications for Cohen's financial interests.

The memo that led to the team's closure shifted the department’s focus away from overseeing digital asset regulation, emphasizing the prosecution of crimes using cryptocurrencies for trafficking or fraud instead.

Blanche reportedly held between $158,000 and $470,000 in crypto assets during the memo's issuance, primarily in Bitcoin and Ethereum, raising questions about whether his financial interests influenced policy.

While Blanche agreed to divest from his crypto holdings, some transactions occurred weeks to months after the enforcement team was dismantled, raising alarms about compliance with conflict of interest rules.

Supporters of the DOJ's policy shift argue it prevents "regulation by prosecution," advocating for regulatory bodies to handle crypto oversight, which was welcomed by industry stakeholders.

Conversely, critics, including the senators involved, warn that dismantling the NCET could create opportunities for illicit activity in a rapidly evolving digital landscape.

The senators are now pressing for transparency regarding when Blanche became aware of the conflict, the pace of his divestment, and internal DOJ processes for reviewing the memo.

This unfolding situation will have significant implications for both the regulatory environment surrounding cryptocurrencies and the integrity of the Department of Justice’s operations.