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.”
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.”
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Arjun Sethi, the co-CEO of major crypto exchange Kraken, criticized the United Kingdom’s crypto regulations, which he believes hinder services for their customers.
In an interview with the Financial Times, Sethi said that “in the UK today, if you go to any crypto website, including Kraken’s, you see the equivalent to a cigarette box.” He suggested that the disclaimers have a significant impact on customer experience.
Sethi suggested that disclosures slow users down and that, because of the importance of speed in crypto trading, “it’s worse for customers.” He concluded that “disclosures are important […] but if there are 14 steps, it’s worse.”
The UK Financial Conduct Authority’s (FCA) updated financial promotion regime came into force in October 2023. It introduced a “cooling-off” period for first-time crypto investors and requires firms to assess whether users have sufficient knowledge and experience before trading.
Sethi said that the rules may prompt customers to avoid investing in crypto altogether, potentially leading to missed potential gains. The FCA defended the rules, noting that “some consumers may make an informed decision that investing in crypto is not right for them — that is our rules working as intended.”
Related: ClearToken gets FCA nod for crypto settlement platform amid UK rules push
The UK is slowly opening to crypto
Despite frustrations with the FCA, the UK appears to be moving toward a broader alignment with the United States on digital-asset oversight.
Lisa Cameron, a former United Kingdom Member of Parliament and founder of the UK-US Crypto Alliance, said she believes a joint “sandbox” between the UK and the US is in development to align their crypto markets.
She came to this conclusion after discussion with US Senators and regulators and expects the sandbox’s purpose to be to “iron out some of this in terms of passporting” for crypto licenses between the UK and the US.
On Monday, the Bank of England published a consultation paper proposing a regulatory framework for stablecoins. The new legislation is focused on sterling-denominated “systemic stablecoins” widely used in payments, similar to the US’s GENIUS Act.
Related: British crypto firm KR1 eyes London Stock Exchange as UK warms to industry: FT
UK looks to the US for an example on crypto
A crypto collaboration between the UK and the US is not a new phenomenon. September reports noted that treasury authorities in the US and UK created a transatlantic task force to explore “short-to-medium term collaboration on digital assets.” Also in September, UK Chancellor Rachel Reeves and US Treasury Secretary Scott Bessent discussed how the two nations could strengthen their coordination on crypto.
September also saw UK trade groups urge the UK government to include blockchain technology in a technology collaboration with the US program known as “Tech Bridge.” A joint letter by the organization warned that “excluding digital assets from the UK-US Tech Bridge would be a missed opportunity,” and that it “risks leaving Britain on the sidelines.”
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