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You are here: Home / Bitcoin Industry News / Senate Dems Slam DOJ’s Decision to Axe Crypto Unit as a ‘Free Pass’ For Criminals

April 11, 2025

Senate Dems Slam DOJ’s Decision to Axe Crypto Unit as a ‘Free Pass’ For Criminals

U.S. Deputy Attorney General Todd Blanche is under fire from Senate Democrats following his recent decision to narrow the Department of Justice’s (DOJ) crypto enforcement priorities and disband its crypto enforcement squad.

In a Thursday letter to Blanche, six Senate Democrats — Sens. Mazie Hirono (D-Hawaii), Elizabeth Warren (D-Mass.), Dick Durbin (D-Ill.), Sheldon Whitehouse (D-R.I), Chris Coons (D-Del.) and Richard Blumenthal (D-Conn.) — blasted his decision to cut the National Cryptocurrency Enforcement Team (NCET) as “giv[ing] a free pass to cryptocurrency money launderers.”

The Senators called Blanche’s directive that DOJ staff no longer pursue cases against crypto exchanges, mixers or offline wallets “for the acts of their end users” or bring criminal charges for regulatory violations in cases involving crypto, including violations of the Bank Secrecy Act (BSA), “nonsensical.”

“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, creating a systemic vulnerability in the digital assets sector,” the lawmakers wrote. “Drug traffickers, terrorists, fraudsters, and adversaries will exploit this vulnerability on a large scale.”

In his memo to DOJ staff on Monday evening, Blanche cited U.S. President Donald Trump’s January executive order on crypto, which promised to bring regulatory clarity to the crypto industry, as the reason for his decision.

“The Department of Justice is not a digital assets regulator,” Blanche wrote, adding that the agency 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.”

Instead, Blanche urged DOJ staff to focus their enforcement efforts on prosecuting criminals who use “victimize digital asset investors” or those who use crypto in the furtherance of other criminal schemes, like organized crime, gang financing, and terrorism.

Read more: DOJ Axes Crypto Unit As Trump’s Regulatory Pullback Continues

For the Senate Democrats, however, Blanche’s claim doesn’t quite cut the mustard.

“You claim in your memo that DOJ will continue to prosecute those who use cryptocurrencies to perpetrate crimes. But allowing the entities that enable these crimes — such as cryptocurrency kiosk operators — to operate outside the federal regulatory framework without fear of prosecution will only result in more Americans being exploited,” the lawmakers wrote.

The lawmakers urged Blanche to reconsider his decision to dismantle NCET, calling it a “critical resource for state and local law enforcement who often lack the technical knowledge and skill to investigate cryptocurrency related crimes.”

New York Attorney General Letitia James raised similar concerns in her own letter to Congress on Thursday, urging lawmakers to pass federal legislation to regulate the crypto markets. Though her letter itself made no mention of Blanche’s memo or the shuttering of NCET, a press release from her office highlighted that her letter “comes after the [DOJ] announced the dismantling of federal criminal cryptocurrency fraud enforcement, making a robust regulatory framework all the more critical.”

Author: Cheyenne Ligon

Filed Under: Bitcoin Industry News

Expert Witness

Ty Sagalow head shotTy Sagalow's unique background in legal, underwriting, policy drafting and claims – and his designation as a “qualified insurance expert” by the United States District Court for the Southern District of California – offers attorneys an unparalleled resource in D&O, E&O and Cyber insurance coverage disputes. He was also named "Most Helpful Expert" in a recent $8.7M coverage decision.

Mr. Sagalow served as Chief Underwriting Officer and General Counsel for AIG Executive Liability (formerly National Union Fire Insurance Company of Pittsburgh, PA), the world’s largest carrier of Directors and Officers Liability and Professional Liability Insurance. As General Counsel, Mr. Sagalow personally wrote or led teams that wrote all the D&O policies and many of the professional liability policies that AIG produced between 1988 and 2000 – policies which continue to serve as the foundational wording for the D&O and professional liability policies in the market today. As AIG Executive Liability’s Chief Underwriting Officer, Mr. Sagalow was charged with all underwriting interpretations and decisions for AIG D&O/E&O policies. In 2009, Mr. Sagalow headed up the team that rewrote all D&O policies for Zurich North America.

Ty is a cum laude graduate of Georgetown University Law Center and holds a LLM from New York University School of Law.

Bitcoin Insurance

Combining his talents as a network security insurance expert and an insurance product development expert, Ty Sagalow is the leading expert on the unique risk and insurance needs of the bitcoin industry.

With the successful sale of BitSecure(tm), the first bitcoin theft insurance policy in February of 2015, he is the first to create a sustainable, robust insurance policy to cover the theft of bitcoins and other virtual currency backed by an A-Rated, global “top 10” Property and Casualty insurance company.

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Innovation Insurance Group is an insurance consulting firm and insurance brokerage founded by 30-year insurance executive, Ty R. Sagalow, former Chief Underwriting Officer, General Counsel and Chief Innovation Officer at AIG, and former Chief Innovation Officer at Zurich, NA and Tower Group. IIG focuses on three core practice groups: product development, expert witness services (primarily in the Management and Professional Liability areas), and bitcoin industry brokerage services.

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