Senators Grill Deputy AG Over DOJ’s Shocking Dissolution of Crypto Enforcement Team
Washington's halls of power are buzzing—and it's not just another stimulus package. Lawmakers are turning up the heat on the Department of Justice, demanding answers for a move that's left the crypto industry both relieved and deeply suspicious.
A Team Vanishes
The DOJ's specialized crypto enforcement unit—tasked with untangling blockchain fraud and chasing digital asset crime—has been quietly disbanded. No fanfare, no press release. Just a strategic retreat that has senators from both sides of the aisle seeing red. They want to know: is this regulatory surrender, or a bureaucratic reshuffle hiding in plain sight?
The Pressure Cooker
In a tense briefing, Deputy Attorney General Lisa Monaco faced a barrage of questions. The core concern? That dissolving the team signals a lack of serious commitment to policing the multi-trillion-dollar crypto ecosystem. Critics argue it's like closing the fraud division right as a new digital gold rush kicks off—a gift to bad actors and a nightmare for consumer protection.
Behind the Bureaucracy
The official line points to 'integration'—spreading crypto expertise across existing divisions like Cyber and Fraud. Proponents call it a force multiplier. Skeptics call it dilution. Without a dedicated team, they warn, complex cases involving mixers, cross-chain bridges, and DeFi exploits could fall through the cracks, moving slower than a congested Ethereum network.
The Finance Jab
Wall Street veterans might chuckle—it's the oldest play in the book. Create a specialized team to show you're 'doing something,' then quietly fold it back into the bureaucracy when the political winds shift or lobbying checks clear. Regulatory theater, but for the blockchain age.
The outcome remains uncertain. Will the DOJ's decentralized approach to enforcement work, or will it simply create a jurisdictional mess perfect for savvy crypto lawyers to exploit? One thing's clear: in the tug-of-war between innovation and oversight, the rope just got a lot slippier.
Senate scrutinizes DAG’s suspicious handling of crypto holdings
The Senators are raising concerns over Blanche’s decisions during the period leading up to and after his decision to disband the crypto enforcement unit. As per the letter, they believe that President Donald Trump’s interest in offloading his crypto stash at the time may have led to the easing of law enforcement scrutiny. They also alleged that Trump’s financial interests appear to be behind some of his recent pardons of crypto-related criminals.
The Senate specifically questioned Deputy AG Blanche’s motivation, noting that he held a large amount of crypto when he decided to shut down the crypto enforcement unit. On January 18, 2025, the DAG disclosed cryptocurrency holdings of between $158,000 and $470,000, mainly in bitcoin and Ethereum. On February 10, 2025, Blanche agreed to divest these assets “as soon as practicable.”
On March 5, Todd Blanche was confirmed as Deputy Attorney General, and on April 7, he issued a memo scaling back the DOJ’s crypto enforcement. His entire crypto holdings were sold or transferred to relatives between May 31 and June 3, 2025.
Following the chain of events described above, the Senate concluded that Blanche’s decision to direct this favorable change in DOJ policy violated the provisions prohibiting executive branch employees from actively participating personally or substantially in such decisions in which they have a financial interest. They added that his conduct is now the subject of a complaint to the DOJ’s Office of the Inspector General, and his willful violations of 18 U.S.C. § 208(a) warrant a five-year prison sentence.
Senators say disbanding crypto enforcement unit makes no sense
According to the Senate, it makes no sense for the DOJ to take a hands-off approach to crypto-related tools that are used to support terrible crimes, such as child sexual exploitation and drug trafficking. A TRM Labs report released on January 28 claimed that illicit crypto volume reached an ATH of $158 billion in 2025, up 145% from 2024.
The TRM Labs report also found that the volume of crypto-related crimes as a percentage of overall crypto volume fell from 1.3% in 2024 to 1.2% in 2025 despite the general increase in total illicit volume. However, while crypto-related criminal activity accounted for only a small share of overall on-chain volume, criminals still captured 2.7% of available liquidity in 2025.
On the other hand, criminals stole a combined total of $2,87 billion in crypto across 150 hacks. Bybit alone accounted for over half of the losses (~51%), with the $1.46 billion stolen through the platform pushing much of the YoY increase in total losses.
Meanwhile, the TRM analysis also noted China’s role in the illicit crypto space. The report claims that the illicit crypto volume associated with Chinese-language escrow services and underground banking networks has increased significantly from $123 million in 2020 to over $103 billion in 2025.
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