US Senate Democrats condemn DOJ for dropping crypto unit, calling it ‘nonsensical’

U.S. Democratic Senators issued strong criticism toward U.S. Deputy Attorney General Todd Blanche in a letter on Thursday, for his decision to shift the Department of Justice away from crypto enforcement priorities and disband the crypto enforcement team.The six Democrats, including Sen. Elizabeth Warren (D-Mass.), said in the letter that the decisions giving "a free pass" to crypto money launderers are "grave mistakes" that would enable sanctions evasion, drug trafficking, scams and child sexual exploitation.Blanche, who served as President Donald Trump's defense lawyer in 2024, directed the immediate shutdown of the DOJ's crypto litigation division, in line with the current administration's friendlier approach to crypto regulation. The Thursday letter specifically took issue with Blanche's announcement that the DOJ would "no longer target" crypto exchanges and mixing services. It cited previous statements and rulings to argue that mixers are mainstays for cybercriminals, including North Korean hackers, in laundering stolen crypto assets."Mixers are also a favorite tool of drug traffickers and those who trade child sexual abuse material," the letter said. "It makes no sense for DOJ to announce a hands-off approach to tools that are being used to support such terrible crimes."The lawmakers called Blanche's latest announcement to have the DOJ no longer prosecute digital asset crimes and Bank Secrecy Act violations "similarly nonsensical.""By abdicating DOJ’s responsibility to enforce federal criminal law when violations involve digital assets, you are suggesting that virtual currency exchanges, mixers, and other entities dealing in digital assets need not fulfill their AML/CFT obligations, creating a systemic vulnerability in the digital assets sector," the letter said. "Drug traffickers, terrorists, fraudsters, and adversaries will exploit this vulnerability on a large scale."The letter added that Blanche's decision to dismantle the National Cryptocurrency Enforcement Team (NCET) can exacerbate the problem, as it was instrumental in leading a department-wide effort to tackle crypto crimes."Further, NCET operates as a critical resource for state and local law enforcement who often lack the technical knowledge and skill to investigate cryptocurrency related crimes," the lawmakers wrote. "Disbanding NCET will make the work of these state and local law enforcement agents that much harder."Recently, U.S. crypto firm SafeMoon cited the DOJ's directive to deprioritize crypto enforcement in an attempt to have charges against the company and its CEO dropped, which include securities violations, wire fraud and money laundering.Among moves to deregulate crypto, earlier today, Trump signed a resolution to repeal the Internal Revenue Service rule, which required "decentralized finance industry participants" to operate like traditional securities brokers, mandating that they collect and report user trading data.On Thursday, New York Attorney General Letitia James also sent a letter to Congress urging lawmakers to pass legislation on crypto regulation, mentioning in particular that a framework is "all the more critical" following the disbanding of the NCET.Disclaimer: The Block is an independent media outlet that delivers news, research, and data. As of November 2023, Foresight Ventures is a majority investor of The Block. Foresight Ventures invests in other companies in the crypto space. Crypto exchange Bitget is an anchor LP for Foresight Ventures. The Block continues to operate independently to deliver objective, impactful, and timely information about the crypto industry. Here are our current financial disclosures.© 2025 The Block. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.