Trump Justice Department Shuts Down Crypto Fraud Investigation Unit

Donald Trump‘s presidential campaign was backed in part by millions of dollars from cryptocurrency firms and wealthy investors in the industry. In return, he has sought to make the U.S. the “crypto capital of the world,” signing an executive order on “strengthening American leadership in digital financial technology” and announcing a U.S. strategic bitcoin reserve and digital asset stockpile.

Trump has promoted the industry as he and his family become deeply invested in crypto themselves. Trump and his wife, Melania, have each launched their own crypto meme coins. The Trump family created their own crypto exchange, World Liberty Financial. And Trump’s sons Eric and Don Jr. recently established their own Bitcoin mining company.

Now, Trump’s Justice Department has indicated they will no longer pursue any investigations of crypto fraud. That’s according to a new memo from U.S. Deputy Attorney General Todd Blanche, who represented Trump in the 2024 trial in which he was convicted on 34 felony counts of falsifying business records.

“The Justice Department will no longer pursue litigation or enforcement actions that have the effect of superimposing regulatory frameworks on digital assets,” Blanche wrote in the memo, noting that the DOJ “is not a digital assets regulator.” Instead, he noted, “investigations and prosecutions involving digital assets shall focus on prosecuting individuals who victimize digital asset investors, or those who use digital assets in furtherance of criminal offenses such as terrorism, narcotics and human trafficking, organized crime, hacking, and cartel and gang financing.”

The memo specifies that the department’s Market Integrity and Major Frauds Unit “shall cease cryptocurrency enforcement in order to focus on other priorities, such as immigration and procurement frauds,” while the National Cryptocurrency Enforcement Team (NCET) “shall be disbanded effective immediately.”

In his announcement, Blanche took up the talking point — bandied about constantly by crypto enthusiasts during last year’s election — that the Biden administration had pursued a crackdown on crypto via the “weaponization” of regulatory agencies. Biden’s Securities and Exchange Commission under chairman Gary Gensler was seen as particularly hostile to crypto in its enforcement actions.

Under Trump, the SEC has since closed major crypto investigations and lawsuits without taking enforcement action. The agency notably threw out its prosecution of one man charged with marketing unregistered crypto securities and manipulating the market for a crypto token after he invested tens of millions of dollars in the Trump family’s World Liberty Financial. Trump has moved to install a new SEC chair who owns up to $6 million in crypto-related assets and is regarded as a welcome change by his fellow investors.

Blanche, too, is a crypto investor, his public financial disclosure form reveals. His digital assets, including bitcoin, ethereum, and solana, are valued at a total of at least $158,000 and as much as $470,000.

The disclosure shows that Blanche represented CLS Global FZC LLC, a crypto firm registered in the United Arab Emirates, in a criminal case after it was charged with conspiracy to commit market manipulation and wire fraud. The company pleaded guilty to this charge and an additional charge of wire fraud in January and was sentenced to three years of probation, during which it will be barred from U.S. crypto markets, and to pay the government $428,059 in fines and seized assets. CLS had been the target of an undercover Justice Department investigation into “wash trading,” or phony trading activity that is meant to lure investment.

In his ethics agreement for taking on the duties of U.S. Deputy Attorney General, Blanche wrote that he would divest his crypto within 90 days of taking office. “With regard to this virtual currency, I will not participate personally and substantially in any particular matter that to my knowledge has a direct and predictable effect on my financial interest in the virtual currency until I have divested it, unless I first obtain a written waiver,” he stated. (There is presently no conflict of interest waiver on file for Blanche on the Office of Government Ethics website.) As for his law firm, Blanche promised not to participate in matters that would affect clients’ ability or willingness to pay amounts owed for his services, nor in matters involving former clients for a period of one year after he last did work for them.

Crypto saw an explosive rally following Trump’s election on the expectation of friendlier policy and greatly reduced oversight, with Bitcoin soaring to the landmark price of $100,000 for the first time in December. But digital tokens have lately plunged along with global markets on the news of Trump’s harsh tariffs on foreign imports. On Monday, Bitcoin slipped to around $75,000, its lowest since November. Some in the crypto community are already grumbling over the hit to their portfolios.

Silicon Valley venture capitalist David Sacks, who serves as Trump’s czar of crypto and AI, looked to allay any fears on X on Tuesday after remaining silent on the economic chaos for the better part of a week. “Black Monday Hoax is over,” he wrote, referring to a slight stock recovery that morning. But those gains were quickly erased as the White House confirmed plans to bring the tariff rate on Chinese imports to 104 percent, and markets plunged once again — with crypto following suit.