Six Senators Accuse DOJ Blanche of Crypto Conflict Over Enforcement Unit Shutdown

Six US senators have formally challenged Deputy Attorney General Todd Blanche over his April decision to shut down the Justice Department’s dedicated crypto enforcement unit, arguing he made the call while holding between 158,000 and 470,000 USD in personal cryptocurrency and may have violated federal ethics law.

In a letter that escalates a months-long controversy, the lawmakers contend Blanche ordered the National Cryptocurrency Enforcement Team disbanded on April 7 despite having agreed barely two months earlier to divest his crypto assets, and that he did not begin disposing of them until late May, with sales or transfers completed only between May 31 and June 3.

A timeline the senators call damning

The sequence at the heart of the letter is precise. On January 10, 2025, just days before the presidential inauguration, Blanche disclosed cryptocurrency holdings valued between 158,000 and 470,000 USD, largely in Bitcoin and Ethereum. On February 10, he agreed to divest those assets “as soon as practicable.” He was confirmed as deputy attorney general on March 5. On April 7, he issued the sweeping policy memo that scaled back crypto enforcement.

The divestment, the senators note, came after the enforcement rollback was already in effect. They argue this raises questions under 18 U.S.C. 208(a), a provision that generally prohibits executive branch officials from participating in decisions that could influence their own financial interests.

The unit Blanche shuttered, established in 2022 under the previous administration, led the Justice Department’s most complicated cryptocurrency crime investigations. It sat at the center of high-profile cases including the investigation of Binance and its founder Changpeng Zhao, who admitted in 2023 to violating US anti-money-laundering laws.

Regulation by prosecution, or protection by prosecuion?

Blanche has defended the closure in ideological terms, arguing the DOJ is not a financial regulator and that prior enforcement efforts amounted to “regulation by prosecution.” His April memo, pointedly titled “Ending Regulation by Prosecution,” instructed prosecutors to focus on individuals who directly victimize crypto investors or use digital assets in crimes such as terrorism financing, narcotics trafficking, organized crime, and human trafficking.

Critically, the memo told prosecutors to avoid pursuing cases against exchanges, mixers, and other platforms merely because crimes occurred on their infrastructure. That shift effectively removed the legal pressure that had produced record corporate settlements across the industry.

The senators see a different motive. Their letter states the decision came at a time when Blanche “had a direct financial interest in cryptocurrencies,” and they note a complaint on the matter is already before the Justice Department’s Office of the Inspector General.

Documents demanded and precedent at stake

The lawmakers have requested that Blanche preserve all relevant documents and provide a comprehensive account of how the divestment issue was reported, handled, and ultimately cleared by ethics officials. The request covers the gap between his February divestment agreement and the June completion of his sales.

The inquiry matters beyond one official’s portfolio. The NCET’s closure marked a broader retreat from corporate crypto enforcement, and if the shutdown were found to have been tainted by a financial conflict, it could fuel calls to rebuild the unit and reopen questions about cases that were deprioritized in its absence.

For an industry that celebrated the end of regulation by prosecution, the letter is an uncomfortable reminder that policy reversals carry their own legal exposure. Ethics rules bind officials regardless of which direction enforcement travels, and a rollback that enriches an official’s personal wallet is as much a violation as a crackdown timed to punish competitors.

What comes next

The senators had raised concerns about Blanche’s decisions previously, but the new letter is the most detailed accounting yet of the divestment timeline and the first to frame the episode explicitly around the criminal conflict-of-interest statute. The Inspector General’s complaint gives the matter a formal investigative track, and document preservation requests signal the lawmakers expect scrutiny to continue.

Neither the Justice Department nor Blanche has publicly responded to the specific allegations in the letter. The episode now sits alongside a string of crypto-related ethics controversies involving senior officials, keeping the question of who benefits from lighter enforcement squarely in the political spotlight as Congress debates broader market structure legislation.

The letter also arrives amid a broader partisan fight over the direction of digital asset policy, where enforcement decisions have become proxy battles for bigger questions about the industry’s place in the financial system. Senate critics have made clear they intend to keep pressing the timeline until the Inspector General weighs in, and they have asked Blanche to confirm in writing that no relevant records have been discarded. For a department that once defined the global standard for prosecuting crypto crime, the questions about why it stopped, and who benefited, are now formally on the record.