U.S. Justice Department Ends Crypto Enforcement Unit and Regulation by Prosecution

The Justice Department directed federal prosecutors not to target virtual currency exchanges, mixing and tumbling services, and "offline wallets" for their end users' actions or unintentional regulatory violations.

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On Monday, the U.S. Department of Justice informed staff that it disbanded the National Cryptocurrency Enforcement Unit (NCET), a division focused on crypto-related investigations.
In a four-page staff memo titled "Ending Regulation by Prosecution", U.S. Deputy Attorney General Todd Blanche stated this decision is effective immediately and aligns with Trump’s January executive order on digital assets to "establish regulatory clarity" for the industry.

"The Department of Justice is not a digital assets regulator. However, the prior Administration used the Justice Department to pursue a reckless strategy of regulation by prosecution," was stated in the memo.

The National Cryptocurrency Enforcement Unit (NCET), established in 2021 under President Joe Biden, was a joint task force comprising prosecutors from the DOJ’s money laundering and cybercrime units, along with attorneys from other district offices.
The unit played a role in major DOJ 'crypto' cases, including the prosecution of Tornado Cash (and likely Samourai Wallet) developers, as well as investigations into North Korean actors involved in laundering proceeds from various digital asset hacks.
The U.S. Deputy Attorney General also instructed DOJ employees to prioritize prosecuting individuals who harm digital asset investors, shifting focus away from cases against exchanges, privacy tools such as mixers and tumblers, and self-custody wallets and related tools.

"Ongoing investigations that are inconsistent with the foregoing should be closed. The Office of the Deputy Attorney General will work with the Criminal Division and EOUSA to review ongoing cases for consistency against this policy. All previously issued policies and directives that are inconsistent with any of the foregoing are rescinded, effective today," was stated in the memo.