Senators press deputy AG on DOJ decision to dissolve crypto enforcement team

The U.S. Senate is questioning Deputy Attorney General Todd Blanche over the Department of Justice’s shutdown of the crypto enforcement unit, urging reconsideration. The Senators are responding to Blanche’s recent reporting that he held substantial amounts of crypto when he made the decision. 

In a letter to the Deputy AG dated January 28, 2026, the Senators emphasized that his actions violated 18 U.S.C. § 208(a). They previously warned that disbanding the National Cryptocurrency Enforcement Team and adopting a hands-off approach to crypto would be a big mistake. The Senators believe that this approach allows criminals to continue evading sanctions and running scams, citing the 162% surge in illicit crypto activity in 2025. 

According to the Senators, most crypto categories saw a rise in criminal activity, but the huge jump was mainly driven by sanctioned entities receiving crypto. Chinese money laundering networks moving billions for Mexican drug cartels are also emerging as a “dominant force” in the crypto space.

Senate scrutinizes DAG’s suspicious handling of crypto holdings

The Senators are raising concerns over Blanche’s decisions during the period leading up to and after his decision to disband the crypto enforcement unit. As per the letter, they believe that President Donald Trump’s interest in offloading his crypto stash at the time may have led to the easing of law enforcement scrutiny. They also alleged that Trump’s financial interests appear to be behind some of his recent pardons of crypto-related criminals. 

The Senate specifically questioned Deputy AG Blanche’s motivation, noting that he held a large amount of crypto when he decided to shut down the crypto enforcement unit. On January 18, 2025, the DAG disclosed cryptocurrency holdings of between $158,000 and $470,000, mainly in Bitcoin and Ethereum. On February 10, 2025, Blanche agreed to divest these assets “as soon as practicable.” 

On March 5, Todd Blanche was confirmed as Deputy Attorney General, and on April 7, he issued a memo scaling back the DOJ’s crypto enforcement. His entire crypto holdings were sold or transferred to relatives between May 31 and June 3, 2025.

Following the chain of events described above, the Senate concluded that Blanche’s decision to direct this favorable change in DOJ policy violated the provisions prohibiting executive branch employees from actively participating personally or substantially in such decisions in which they have a financial interest. They added that his conduct is now the subject of a complaint to the DOJ’s Office of the Inspector General, and his willful violations of 18 U.S.C. § 208(a) warrant a five-year prison sentence.

Senators say disbanding crypto enforcement unit makes no sense

According to the Senate, it makes no sense for the DOJ to take a hands-off approach to crypto-related tools that are used to support terrible crimes, such as child sexual exploitation and drug trafficking. A TRM Labs report released on January 28 claimed that illicit crypto volume reached an ATH of $158 billion in 2025, up 145% from 2024.

The TRM Labs report also found that the volume of crypto-related crimes as a percentage of overall crypto volume fell from 1.3% in 2024 to 1.2% in 2025 despite the general increase in total illicit volume. However, while crypto-related criminal activity accounted for only a small share of overall on-chain volume, criminals still captured 2.7% of available liquidity in 2025.

On the other hand, criminals stole a combined total of $2,87 billion in crypto across 150 hacks. Bybit alone accounted for over half of the losses (~51%), with the $1.46 billion stolen through the platform pushing much of the YoY increase in total losses. 

Meanwhile, the TRM analysis also noted China’s role in the illicit crypto space. The report claims that the illicit crypto volume associated with Chinese-language escrow services and underground banking networks has increased significantly from $123 million in 2020 to over $103 billion in 2025.

If you're reading this, you’re already ahead. Stay there with our newsletter.