TLDR
US senators are challenging the Justice Department over a policy shift that scaled back its dedicated crypto crime unit and may involve ethics issues.
- Six senators wrote to Deputy AG Todd Blanche over shutting down the DOJs National Cryptocurrency Enforcement Team while he held substantial crypto.
- They argue the policy change coincided with a sharp rise in illicit crypto flows and weakened enforcement against exchanges, mixers, and large intermediaries.
- An internal review and political pressure could push DOJ back toward tougher platform?level enforcement, affecting exchanges, mixers, and privacy tools.
Deep Dive
1. What Senators Are Probing
According to a detailed letter reported by crypto media, six senators, including Mazie Hirono and Elizabeth Warren, are questioning Deputy Attorney General Todd Blanche over his April 2025 decision to disband the DOJs National Cryptocurrency Enforcement Team (NCET) and scale back crypto cases. The letter cites Blanches personal crypto holdings, disclosed at between $158,000 and $470,000, mainly in Bitcoin and Ethereum, at the time he ordered the change, and alleges a potential conflict with federal ethics rules under 18 U.S.C. 208(a).[](https://cryptonews.com/news/senators-confront-deputy-ag-doj-crypto-unit-shutdown/)
The senators say Blanche agreed to divest his holdings early in 2025 but only began selling weeks after issuing his Ending Regulation by Prosecution memo, which told prosecutors to de?prioritize actions against exchanges, mixers, and similar platforms.[](https://cointelegraph.com/news/united-states-crypto-task-force-doj-todd-blanche) DOJs Office of the Inspector General is reportedly reviewing the matter.
2. Link To Rising Crypto Crime
The NCET, created in 2022, led high profile cases such as DOJs action against Binance and founder Changpeng CZ Zhao.[](https://cointelegraph.com/news/united-states-crypto-task-force-doj-todd-blanche) Senators argue its shutdown, plus the policy pivot away from platform enforcement, coincided with a surge in illicit crypto activity.
They cite blockchain analytics from TRM Labs estimating about $158 billion in crypto used in criminal activity in 2025, up roughly 145 percent from 2024, with around $2.87 billion stolen across nearly 150 hacks.[](https://cryptonews.com/news/senators-confront-deputy-ag-doj-crypto-unit-shutdown/) Their core claim is that weakening centralized enforcement has made it easier for sanctions evasion, fraud, and human trafficking networks to operate in digital assets.
If lawmakers successfully frame light touch DOJ policy as driving crime, future regulations are more likely to favor aggressive oversight of large venues and intermediaries.
3. What To Watch Next
The immediate next step is the DOJ inspector generals review of Blanches conduct and the NCET shutdown. Outcomes could range from no action to formal findings that force policy changes or his recusal from crypto matters.
In parallel, senators are already pushing broader crypto market structure and ethics rules, including proposals to limit officials crypto holdings and strengthen anti?illicit finance measures.[](https://coingape.com/senators-propose-amendments-to-crypto-market-structure-bill-ahead-of-tomorrows-markup/) For the industry, the key signals will be whether DOJ revives a specialized crypto unit, resumes aggressive cases against exchanges and mixers, or instead doubles down on the current individual?focused approach.
Crypto businesses should expect enforcement priorities to remain politically contested, with a real chance of a swing back toward platform?level cases if this probe gains traction.
Conclusion
Senators are using the NCET shutdown and Blanches personal holdings to challenge a softer DOJ stance on crypto, linking it to rising illicit activity. If their pressure results in ethics findings or renewed task?force style enforcement, centralized exchanges, mixers, and other large intermediaries could again become primary targets, reshaping compliance expectations across the market.
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