Trump relaxes regulatory enforcement against crypto companies 

WASHINGTON (CN) — The Department of Justice under President Donald Trump will cease efforts to prosecute cryptocurrency platforms the previous administration accused of fraud.

In amemosent on Monday night, Deputy Attorney General Todd Blanche told prosecutors that the department would focus on individual bad actors rather than platforms moving forward. The four-page memo disbands the Joe Biden-era National Cryptocurrency Enforcement Team, ends the Justice Department’s enforcement of regulatory violations and closes ongoing investigations.

“The Department of Justice is not a digital assets regulator,” Blanche said. “However, the prior administration used the Justice Department to pursue a reckless strategy of regulation by prosecution, which was ill conceived and poorly executed."

The move aligns with Trump’s embrace of the digital assets marketplace. In January, Trump issued Executive Order 14178, which aimed to promote the United States’ leadership in digital assets and financial technology.

“The digital assets industry is critical to the nation’s economic development and innovation,” Blanche said. “President Trump has also made clear that ‘[w]e are going to end the regulatory weaponization against digital assets.’”

The memo directs prosecutors to shift focus toward individuals victimizing digital asset investors or those who use digital assets in furtherance of criminal offenses such as terrorism, human trafficking, organized crime, hacking and gang financing, while leaving platform-wide enforcement actions for regulatory agencies.

“The Justice Department will no longer pursue litigation or enforcement actions that have the effect of superimposing regulatory frameworks on digital assets while President Trump’s actual regulators do this work outside the punitive criminal justice framework,” Blanche said.

Blanche asked prosecutors to avoid charging violations of the Bank Secrecy Act, unregistered securities offerings, unregistered broker-dealer violations and other violations of registration requirements under the Commodity Exchange Act. Blanche further instructed prosecutors to halt charging violations of the Securities Act of 1933, the Securities Exchange Act of 1934 and the Commodity Exchange Act.

“This priority is not required by law, but is being imposed as a matter of discretion, in recognition of the Justice Department’s priorities and the fact that the Biden Administration created a particularly uncertain regulatory environment around digital assets,” Blanche said.

The National Cryptocurrency Enforcement Team was established in 2022 to identify, investigate, support and pursue the department’s cases involving the criminal use of digital assets. It focused mainly on virtual currency exchanges, mixing and tumbling services, infrastructure providers and other entities that enable the misuse of cryptocurrency to commit or facilitate criminal activity. Blanche said prosecutors will focus on the criminal organizations using the platforms rather than the platforms themselves.

Blanche ordered the Market Integrity and Major Frauds Unit to halt cryptocurrency enforcement so it could focus on other priorities, like immigration and procurement fraud. From 2019 to 2022, theunit charged cryptocurrency fraud cases involving over $2 billion in intended financial losses to investors worldwide.

On March 6, Trump issued Executive Order 14233 directing the treasury secretary to create a “Strategic Bitcoin Reserve and the United States Digital Asset Stockpile.”

“Because there is a fixed supply of BTC, there is a strategic advantage to being among the first nations to create a strategic bitcoin reserve,” Trump said in the order. “Just as it is in our country’s interest to thoughtfully manage national ownership and control of any other resource, our nation must harness, not limit, the power of digital assets for our prosperity.”

The memo comes after the Department of Treasury removed economic sanctions against Tornado Cash on March 21. The mixing platform’s co-founder, Alexey Pertsev, was convicted of laundering money to criminal organizations, including the North Korea-linked hacking organization the Lazarus Group. A Dutch court sentenced Pertsev to 64 months in prison for failing to provide sufficient safeguards to prevent criminals from exploiting the platform.

The U.S. banned Tornado Cash in 2022, but the Fifth Circuit Court of Appeals overturned the sanctions last November, finding the Office of Foreign Assets Control overstepped its bounds. The case centered on whether the platform’s smart contracts — autonomous lines of code designed to function without human intervention between users and the platform — constitute property. The appeals court found the contracts aren’t property as they cannot be owned or controlled.

Some ongoing cases that the Department of Justice will no longer pursue include litigation against BitConnect, a cryptocurrency investment platform accused of engaging in a Ponzi scheme in which the platform claimed it would use investors’ money as working capital to fund its investments. According to the indictment, the invested funds were actually distributed to pay earlier investors in the lending program with money from later investors.

Another ongoing case accuses the founder of Baller Ape Club, a non-fungible token company, of pulling the rug on investors when they closed the company’s website less than a month after launching.

The department declined to comment.