Senators say DOJ crypto rollbacks coincided with ethics concerns and a sharp rise in illegal crypto activity.
U.S. Senate Democrats are questioning recent changes to federal cryptocurrency enforcement. In a letter sent on Wednesday, the lawmakers accused Deputy Attorney General Todd Blanche of participating in crypto-related decisions while holding significant crypto investments.
Lawmakers Cite Possible Conflict Tied to DOJ Cryptocurrency Decisions
Six senators said Deputy Attorney General Todd Blanche broke federal rules meant to prevent conflicts of interest. According to lawmakers, his decisions could have benefited him financially while in office.
At the time, Blanche disclosed holding about $600,000 in digital assets, mainly Bitcoin and Ethereum. In a letter sent on Wednesday, senators raised concerns over Blanche’s crypto holdings. They believe such assets should have prevented him from taking part in crypto enforcement decisions.
Senators wrote that Blanche should have stepped aside from any decisions tied to crypto enforcement. The letter cited 18 U.S.C. § 208(a), which bars executive branch officials from participating in decisions that affect their own financial interests.
In addition, the letter stated that a series of events unfolded over several months. Blanche disclosed his cryptocurrency holdings on January 18, 2025, then agreed to divest those assets “as soon as practicable.”
After winning Senate confirmation on March 5, he issued a memo on April 7 reducing crypto enforcement. Records later showed his crypto assets were sold or transferred to relatives between May 31 and June 3.
Lawmakers argued that the policy shift occurred while Blanche still had a financial stake in the crypto market. Based on that timeline, senators concluded he actively participated in decisions tied to assets he owned. Such conduct, they said, violates clear limits placed on executive branch officials.
The letter also raised concerns about President Donald Trump’s financial interests in digital assets. Senators suggested the president may have sought to sell personal crypto holdings during the same period that enforcement pressure eased. They further alleged that some recent pardons for crypto-related crimes appear to be linked to Trump’s financial exposure to the sector.
Senate Democrats Link DOJ Enforcement Cuts to Crypto Crime Rise
Last year, the same lawmakers asked the Department of Justice to justify the shutdown of the National Cryptocurrency Enforcement Team. In an earlier letter, they warned the move could make it easier for criminals to evade sanctions, traffic drugs, run scams, and fund child exploitation.
DOJ officials responded by assuring prosecutors would continue to pursue cryptocurrency-related crimes. However, the senators cited the Chainalysis Crypto Crime Report, which showed that illegal crypto activity rose 162% in 2025.
According to the report, a sharp rise in funds received by sanctioned entities drove much of that growth. Even without those inflows, the report said 2025 would still mark the highest year on record for crypto crime.
The officials noted that crypto crime rose mainly because sanctioned groups received more digital currency. Other crimes, such as human trafficking and violent activity, also increased. Chinese money laundering groups are now playing a larger role by moving money for Mexican drug cartels through crypto.
The letter concluded by stating Blanche’s actions are now under review by the DOJ’s Office of the Inspector General. Lawmakers argued that willful violations of 18 U.S.C. § 208(a) carry a potential prison sentence of up to five years.