Judges Fill Crypto Enforcement Void as Federal Oversight Wanes

Civil judges are increasingly intervening to freeze stolen cryptocurrency as federal enforcement efforts decline. With regulatory agencies understaffed and underfunded, courts have become the last resort for victims seeking restitution. The trend exposes systemic vulnerabilities in handling Web3-related fraud.

Judges face steep learning curves when ruling on blockchain transactions. Limited technical expertise creates opportunities for sophisticated scammers to exploit legal loopholes—some successfully petition courts to release frozen assets. Retail investors bear the brunt of these institutional gaps.

The Trump administration's rollback of crypto oversight continues to reverberate. A vacant CFTC chair seat and depleted Justice Department resources have left enforcement in disarray. "People are desperately trying to recover assets through civil courts," notes former prosecutor Scott Armstrong, highlighting the breakdown in federal safeguards.