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.

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.” 

Targeting Trump family crypto endeavors 

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.”

Magazine: Illegal arcade disguised as … a fake Bitcoin mine? Soldier scams in China: Asia Express

New York Attorney General Letitia James has sent a letter to US congressional leaders urging “common sense” federal crypto regulations and to keep digital assets out of US pensions.

“I am urging Congress to pass legislation that would strengthen federal regulations on the cryptocurrency industry to protect investors, strengthen financial markets, and stop fraud,” James said in a 14-page letter shared on April 10, outlining six major risks if the sector remains unregulated.

She said that without appropriate safeguards, the “unchecked proliferation of digital assets” undermines US dollar dominance, weakens national security due to criminal activity, and “undermines the stability of financial markets.” 

Unregulated crypto also subjects investors to “price manipulation and rigged markets,” facilitates fraud that “drains billions of dollars from hardworking Americans, and extracts assets and investments from the American economy,” she said. 

James made a number of recommendations and pushed Congress for legislation that would require stablecoin issuers to have a US presence and regulatory oversight and mandate backing stablecoins with US dollars or treasuries. 

She also wants regulations that require platforms to work only with anti-money laundering-compliant entities, establish registration requirements for issuers and intermediaries, protect against conflicts of interest and promote price transparency and require fraud prevention measures.

No crypto assets in pension funds 

The New York’s top lawyer also aired her concerns about including crypto in pension funds. 

“Digital assets are uniquely unsuitable for retirement savings due to their high volatility,” she said, claiming that they have no value.

“The underlying value of cryptocurrency is unpredictable and not determined by true price discovery because they have no intrinsic value on which their prices are based.”

James also urged against retirement funds investing in crypto-tracking exchange-traded funds, stating that “unlike traditional exchange-traded funds backed by stocks and bonds, cryptocurrency held to back cryptocurrency ETFs are at risk of permanent theft.” 

Related: US lawmaker will reintroduce crypto retirement bill to help Trump agenda

“As Congress takes the mantle to propose legislation governing the cryptocurrency industry, we hope it also takes action to mitigate the risks posed by the industry to America’s national security, financial stability, and citizens,” James said. 

The call for regulation follows the US Department of Justice’s reported dismantling of its federal criminal cryptocurrency fraud enforcement division.

Magazine: 3 reasons Ethereum could turn a corner: Kain Warwick, X Hall of Flame