Senate Democrats criticise DOJ for disbanding crypto enforcement squad

U.S. Senate Democrats have criticised Deputy Attorney General Todd Blanche's decision to dismantle the Department of Justice's (DOJ) National Cryptocurrency Enforcement Team (NCET).

In a letter sent to Blanche on April 10, 2025, six Democratic senators expressed concern that the move would weaken anti-money laundering efforts and leave the digital asset sector vulnerable to exploitation.

The senators, including Sens. Elizabeth Warren (D-Mass.), Dick Durbin (D-Ill.), and Sheldon Whitehouse (D-R.I.), called the decision "a free pass to cryptocurrency money launderers."

They argue that Blanche's directive to no longer pursue criminal cases against crypto exchanges, mixers, or offline wallets for the actions of their users creates significant security gaps.

In his memo, Blanche justified the decision by citing President Donald Trump's January executive order on crypto, which emphasised the need for clearer regulations on digital assets.

Blanche explained that the DOJ would no longer engage in regulatory enforcement of digital assets, leaving such matters to other regulatory bodies outside the criminal justice system.

Instead, he stated that the DOJ would focus on prosecuting crimes involving cryptocurrencies, such as fraud, organised crime, and terrorism.

However, the senators challenged this reasoning, arguing that not prosecuting entities enabling criminal activities with crypto, such as kiosks and exchanges, would result in more harm to the public.

"By abdicating DOJ’s responsibility to enforce federal criminal law when violations involve digital assets, you are suggesting that virtual currency exchanges, mixers, and other entities dealing in digital assets need not fulfill their anti-money laundering/countering the financing of terrorism obligations," the lawmakers wrote.

The senators also emphasised that NCET has been a vital resource for state and local law enforcement agencies, which often lack the expertise needed to investigate crypto-related crimes.

New York Attorney General Letitia James echoed these concerns, advocating for stronger federal regulations to address the growing risks in the crypto market.