Democrats Press DOJ Deputy Over Crypto Holdings, Enforcement Retreat

Six Democratic senators have accused Deputy Lawyer Normal Todd Blanche of violating conflict-of-interest legislation by dismantling crypto enforcement whereas holding substantial digital belongings.

In a letter despatched Wednesday, Senators Mazie Hirono (D-HI), Richard Durbin (D-IL), Elizabeth Warren (D-MA), Sheldon Whitehouse (D-RI), Christopher Coons (D-DE), and Richard Blumenthal (D-CT) alleged that Blanche’s actions could have violated federal conflict-of-interest legislation, citing monetary disclosures exhibiting he held between $158,000 and $470,000 in crypto when he issued a coverage memo easing oversight of the trade.

The lawmakers pointed to 18 U.S.C. § 208(a), which prohibits government department officers from taking part in selections that might have an effect on their private monetary pursuits.

“On the very least, you had a obtrusive battle of curiosity and may have recused your self,” they wrote.

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Blanche allegedly held the crypto in Bitcoin and Ethereum when he issued final yr’s memo titled “Ending Regulation by Prosecution,” regardless of promising to divest “as quickly as practicable” in February 2025.

The Deputy AG’s memo disbanded the Nationwide Cryptocurrency Enforcement Staff, declaring the DOJ would now not pursue felony instances in opposition to crypto exchanges, mixing providers, or chilly pockets holders for “acts of their finish customers or unwitting violations of laws.” 

Fairly than totally liquidating his holdings, Blanche “bought or transferred” his crypto belongings to kinfolk, elevating considerations that the divestment didn’t eradicate potential monetary affect, the senators allege.

The letter demanded that Blanche clarify what was “appropriately flagged, addressed, and cleared prematurely,” present information of communications with crypto representatives between March 5 and April 7, and why he waited till Might 31 to divest. 

The senators set a February 11 deadline for Blanche’s responses.

“It’s not robotically improper for a senior DOJ official to carry some crypto, but it surely turns into inherently dangerous when that very same official is personally dialling up or down crypto enforcement whereas sitting on a sizeable bag,” Hong Kong Web3 Affiliation co-chair Joshua Chu advised Decrypt.

“In opposition to a backdrop of completely timed trades, an ethics investigation is the naked minimal,” he added.

“You possibly can nearly see the 2026 midterms from right here: if DOJ crypto enforcement is already entangled with insider-style flows and prediction-market bets,” Chu mentioned, warning it may spiral into crypto-linked intel leaks, impeachment discuss, and even treason claims in late 2026 and early 2027.

The senators mentioned that they had warned of their prior letter that “disbanding the Nationwide Cryptocurrency Enforcement Staff and taking a hands-off method to crypto platforms would allow sanctions evasion, drug trafficking, scams, and little one exploitation.”

“Sadly, our predictions have confirmed appropriate,” the senators mentioned, citing a January 2026 Chainalysis report that confirmed illicit crypto exercise surged 162% final yr, aligning their considerations about nationwide safety dangers.

“Whereas this story has drawn consideration as a result of it entails digital belongings, the underlying subject is not distinctive to cryptocurrency—it is about transparency and potential conflicts of curiosity,” Joe Ciccolo, Founder & President of BitAML, advised Decrypt.

“Public officers routinely maintain a variety of belongings, from actual property to particular person shares and enterprise pursuits,” Ciccolo mentioned, including that calling this undue affect is a stretch with out proof of a “particular enterprise enterprise or direct transactional relationship.”

Decrypt has reached out to the DOJ for additional remark.