The Trump administration has disbanded Justice Department troops responsible for investigating cryptocurrency crimes, criticizing the Biden administration for being too aggressive towards the fast-growing industry.
In a memo issued late Monday, Deputy Attorney General Todd Blanche denounced his predecessor for investigating cryptocurrency operators in a way that he was called “pregnant and not executed properly.” He instead directed the department to narrow the focus of cryptocurrency investigations into crimes such as fraud, drug trafficking and terrorism.
The directive coincides with President Trump’s broad embrace of the crypto industry during his campaign and as he moves to ease enforcement.
The Trump family expanded business profits in the industry, including establishing a crypto venture, World Liberty Financial. Just before he took office, Trump issued his own memo coin. Trump Media & Technology Group, a social media company whose majority shareholder, also said it plans to introduce many digital asset investment products this year.
The Department of Justice directive follows a similar move in the Securities and Exchange Commission. This dismissed lawsuits and pending investigations that included issues that the crypto company had not registered as an exchange. Many SEC attorneys in these cases have left the regulatory authority.
The SEC has also significantly reduced staffing for crypto enforcement units. On a policy issue, the SEC says it will not attempt to regulate memokine because novelty digital assets are not securities.
In its memo, the Justice Department accused the Biden administration of “a reckless regulatory strategy through prosecution” towards the world of digital currency.
Going forward, Blanche writes that prosecutors should only pursue cryptocurrency cases that “include the actions of victim investors,” and that fund fraud, hacking, and other crimes such as fentanyl and human trafficking. The prosecution said “is important to restore stolen funds to customers and build investors’ trust in the security of the digital asset market and the growth of the digital asset industry.”
He ordered a group of prosecutors investigating market integrity and major fraud to halt the pursuit of cryptocurrency enforcement and instead focus on immigration issues and contractor fraud.
He also disbanded the National Cryptocurrency Enforcement team, a group within the Department of Justice headquarters that was recently created to handle such cases. Blanche writes that the office of a personal lawyer may still pursue cases that include cryptocurrency investigations.
This new approach appears to be aimed at preventing cases like those submitted in 2023 against Binance founder Changpeng Zhao, a violation of the Bank’s Secret Act. The company has agreed to pay a $4.3 billion fine as part of its guilty plea.
During the first days of the administration, Trump officials signaled their dissatisfaction with such cases when they effectively demoted the prosecutor who founded the cryptocurrency enforcement team, Eun Young Choi.
The team was created in 2022 to help prosecutors penetrate the frequently vague world of cryptocurrency as cross-border criminals began to use digital money more and more to promote crime.
Matthew Goldstein Contributed with a report from New York.
Source: www.nytimes.com
