Democrats slam DOJ’s ‘grave mistake’ in disbanding crypto crime unit

Crypto-critical US Senator Elizabeth Warren has led six Senate Democrats in urging the Department of Justice to reverse its decision to terminate its crypto investigations and prosecutions division.

In an April 10 letter to Deputy Attorney General Todd Blanche, the Senators said the decision to disband the department’s National Cryptocurrency Enforcement Team was a “grave mistake” that would support “sanctions evasion, drug trafficking, scams, and child sexual exploitation.”

Senators Richard Durbin, Mazie Hirono, Sheldon Whitehouse, Christopher Coons and Richard Blumenthal signed the letter in addition to Warren.

On April 7, Blanche shuttered the DOJ’s crypto enforcement team, saying in a memo that “The Department of Justice is not a digital assets regulator.”

The senators claim that the decision gave a “free pass to cryptocurrency money launderers” and claimed that crypto mixing services — used to obfuscate blockchain transactions — are “go-to tools for cybercriminals.” 

“It makes no sense for DOJ to announce a hands-off approach to tools that are being used to support such terrible crimes,” the letter said.

An excerpt of Democrat’s letter to the DOJ. Source: US Senate Committee on Banking, Housing, and Urban Affairs

The senators also questioned why the Justice Department  had decided not to prosecute a “host of crimes involving digital assets, including violations of the Bank Secrecy Act.”

They claimed that this creates a “systemic vulnerability in the digital assets sector,” which “drug traffickers, terrorists, fraudsters, and adversaries” will exploit on a large scale. 

The lawmakers requested a staff-level briefing no later than May 1, providing “detailed information on the rationale behind these decisions.” 

The letter also took a swipe at the Trump family’s crypto projects, suggesting potential conflicts of interest.

Related: SafeMoon boss cites DOJ’s nixed crypto unit in latest bid to toss suit

A press release accompanying the letter stated that the senators are raising concerns about the “potential connections” between the DOJ’s actions and the crypto ventures of President Donald Trump and his family.

The Trumps have an interest in and have backed the crypto platform World Liberty Financial along with its token. The platform is also planning to launch a stablecoin while President Trump’s sons, Eric Trump and Donald Trump Jr., are working to launch a crypto-mining company called American Bitcoin.

“Your decisions give rise to concerns that President Trump’s interest in selling his cryptocurrency may be the reason for easing law enforcement scrutiny,” the Democrats stated.  

In a memo announcing the crypto enforcement team’s disbandment, Blanche accused the Biden administration of using the Justice Department to “pursue a reckless strategy of regulation by prosecution.”

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