by Joel Cohen, Brent Wible, Ladan Stewart, Marietou Diouf, Robert Denault, and Elisha Mvundura
High left to proper: Joel Cohen, Brent Wible and Ladan Stewart, Backside left to proper: Marietou Diouf, Robert Denault and Elisha Mvundura (Photographs courtesy of White & Case LLP).
On April 7, 2025, Deputy Legal professional Basic Todd Blanche issued a memorandum instructing federal prosecutors to stop pursuing “litigation or enforcement actions which have the impact of superimposing regulatory frameworks on digital belongings,” noting that regulators and never prosecutors will “do that work exterior the punitive felony justice framework.”[1] Beneath the brand new coverage, the Justice Division will prioritize investigations and prosecutions involving people who defraud buyers in digital belongings or who use digital belongings in furtherance of different crimes, together with offenses associated to terrorism, narcotics trafficking, human trafficking, organized crime, hacking, and cartel and gang financing. The memorandum signifies that the Justice Division plans to shut all ongoing investigations which might be inconsistent with the brand new coverage.
Since taking workplace, President Trump has promised to “finish the regulatory weaponization in opposition to digital belongings.”[2] In furtherance of that aim, the President issued two Govt Orders containing directives aligned with the steerage within the current Justice Division memorandum. Govt Order 14178 duties the Justice Division and others with defending and selling (1) the flexibility of particular person residents and private-sector entities alike to entry and use for lawful functions open public blockchain networks with out persecution and (2) truthful and open entry to banking companies for all law-abiding particular person residents and personal sector entities alike.[3] Individually, Govt Order 14157 directs the Justice Division to prioritize instances involving the usage of digital belongings in furtherance of illegal conduct by cartels, Transnational Legal Organizations, Overseas Terrorist Organizations, and Specifically Designated World Terrorists.[4]
In keeping with the Govt Orders, the brand new memorandum instructs federal prosecutors to think about the next components when deciding whether or not to pursue felony costs involving digital belongings:
- Prosecutors will prioritize investigations and enforcement actions in opposition to people who (a) trigger monetary hurt to buyers and shoppers; and/or (b) use digital belongings in furtherance of felony conduct.
- Prosecutors shouldn’t cost “regulatory violations” in instances involving digital belongings—outlined to incorporate unlicensed cash transmitting beneath 18 U.S.C. §1960(b)(1)(A) and (B), violations of the Financial institution Secrecy Act, unregistered securities providing violations, unregistered broker-dear violations, and different violations of the registration necessities beneath the Commodity Alternate Act—until there’s proof the defendant knew of the licensing or registration requirement and willfully violated it.
- Prosecutors shouldn’t cost violations of the Securities Act of 1933, the Securities Alternate Act of 1934, the Commodity Alternate Act, or the rules promulgated pursuant to those acts in instances the place (a) the cost would require the Justice Division to litigate whether or not a digital asset is a safety or commodity, and (b) there’s an enough different felony cost accessible.[5]
Prosecutors who pursue instances that contain exceptions to those insurance policies should first acquire approval from the Deputy Legal professional Basic. Whereas the memorandum signifies that regulatory violations ought to be pursued by regulatory businesses, the director of least one regulatory company—Caroline Pham, Appearing Chairman of the Commodity Futures Buying and selling Fee (CFTC)—issued a press launch instructing the CFTC enforcement division and workers to adjust to most of the provisions within the newly introduced Justice Division coverage.[6] In the meantime, the SEC has made clear from the early days of the Trump administration that its enforcement efforts within the digital asset house shall be restricted to fraud instances and the company has systematically closed or dismissed ongoing enforcement issues based mostly on non-fraud regulatory violations.[7]
The brand new memorandum represents a shift in tone and emphasis on the Justice Division in relation to digital belongings, in addition to a major redistribution of prosecutorial assets. The Division’s Nationwide Cryptocurrency Enforcement Group is disbanded, and the Fraud Part’s Market Integrity and Main Frauds Unit is directed to stop cryptocurrency enforcement. Nonetheless, the Division’s felony enforcement involving cryptocurrency will proceed. The Division will proceed to pursue and prioritize funding frauds and different fraud schemes involving cryptocurrency that victimize buyers, in addition to cash laundering and illicit finance schemes involving cryptocurrency, notably the place such schemes relate to cartels, transnational felony organizations (TCOs), human trafficking and human smuggling, or terrorism. The memorandum additionally signifies that prosecutors will proceed to pursue felony instances the place exchanges or wallets are hacked, ensuing within the theft of digital belongings.
The brand new steerage is unclear, nevertheless, in relation to the Justice Division’s strategy to cryptocurrency exchanges and different platforms. The memorandum states that the Division “will not goal digital foreign money exchanges, mixing and tumbling companies, or offline wallets for acts of their finish customers or unwitting violations of rules—besides to the extent the investigation is per the priorities articulated” within the memorandum. The memorandum additional states that the Division “won’t pursue actions in opposition to the platforms that felony enterprises make the most of to conduct unlawful actions.” Nevertheless, in describing the circumstances wherein prosecutors can pursue registration and Financial institution Secrecy Act costs in opposition to platforms—i.e., the place a platform knew of a regulatory requirement and willfully violated it—the steerage leaves a viable pathway for prosecutors to deliver enforcement actions in opposition to digital belongings platforms, notably given the Monetary Crimes Enforcement Community’s (FinCEN) longstanding steerage about how rules referring to cash companies companies (MSBs) apply to enterprise fashions involving digital currencies.[8] Taken collectively, this facet of the memorandum and FinCEN’s regulation of sure digital foreign money companies as MSBs counsel that exchanges and different platforms will proceed to face enforcement threat. Regardless of readability on sure important factors about the way forward for DOJ crypto enforcement, a lot stays unsettled and would require nuanced evaluation following Justice Division exercise going ahead to know the scope of those adjustments.
As famous, the memorandum instructs prosecutors to shut ongoing investigations which might be inconsistent with the coverage. Time will inform whether or not the Division will apply the coverage to charged and pending instances as effectively. Final month, the President pardoned a number of people, together with an trade, that had been convicted of violating the Financial institution Secrecy Act.[9]
The steerage additionally focuses on asset forfeiture and utilizing the remission course of in cryptocurrency instances to compensate victims. Particularly, it highlights that, beneath the remission rules, digital asset investor victims are in a position to get well solely the worth of their digital belongings on the time the fraud was dedicated.[10] The steerage directed the Division’s Workplace of Authorized Coverage and Workplace of Legislative Affairs to judge and suggest legislative and regulatory adjustments to handle this subject and probably permit victims to obtain extra compensation the place the worth of digital belongings will increase after the fraud was full and the victims would have benefited from these beneficial properties if not for the fraud. This strategy could sign a broader curiosity—past instances involving digital belongings—in prioritizing white collar instances the place there are victims—together with all kinds of funding fraud schemes.
The coverage continues the Trump Administration’s development of adopting a crypto-friendly regulatory strategy. For years, proponents of digital belongings have criticized “regulation by enforcement” by the SEC and different regulatory businesses, arguing that reliance on enforcement actions to manage digital belongings has resulted in an setting hostile to innovation and conducive to fraud.[11] The Justice Division’s new coverage, which targets “regulation by prosecution,” seems to be extension of that rallying cry. Even beneath the brand new coverage, nevertheless, the Justice Division will proceed to prioritize fraud, cash laundering, and hacking instances involving cryptocurrency, and will even proceed to carry digital asset platforms accountable when, for instance, they willfully fail to register with FinCEN and implement an efficient anti-money laundering program. In spite of everything, a platform that fails to implement such a program—like every monetary establishment that fails to take action—is all of the extra probably for use by terrorists, cartels, human smuggling organizations, and different TCOs.
[1] Dep’t of Justice, Ending Regulation By Prosecution (April 7, 2025) accessible right here.
[2] See id.
[3] Exec. Order Strengthening American Management in Digital Monetary Expertise (Jan. 23, 2025) accessible right here.
[4] Exec. Order Designating Cartels and Different Organizations as Overseas Terrorist Organizations and Specifically Designated World Terrorists (Jan. 20, 2025) accessible right here.
[5] Dep’t of Justice, Ending Regulation By Prosecution (April 7, 2025) accessible right here.
[6] CFTC, Appearing Chairman Pham Lauds DOJ Coverage Ending Regulation by Prosecution of Digital Belongings Trade and Directs CFTC Employees to Adjust to Govt Orders (Apr. 8, 2025) accessible right here.
[7] Assertion, Comm’r Hester M. Peirce, Getting Again on Base: Assertion of Commissioner Hester M. Peirce on the Dismissal of the Civil Enforcement Motion In opposition to Coinbase (Feb 27, 2025) accessible right here.
[8] Dep’t of the Treasury FinCEN, Software of FinCEN’s Rules to Sure Enterprise Fashions Involving Convertible Digital Currencies (Could 9, 2019) accessible right here; Dep’t of the Treasury FinCEN, Software of FinCEN’s Rules to Individuals Administering, Exchanging, or Utilizing Digital Currencies (March 18, 2013) accessible right here.
[9] Press Launch No. 25-010, Dep’t of Justice, World Cryptocurrency Alternate BitMEX Fined $100 Million For Violating Financial institution Secrecy Act (Jan 15, 2025) accessible right here; Donald J. Trump, Govt Grant of Clemency (March 27, 2025) accessible right here.
[10] 28 C.F.R. § 9.8(c) (“The quantity of the pecuniary loss suffered by a sufferer for which remission could also be granted is restricted to the truthful market worth of the property of which the sufferer was disadvantaged as of the date of the prevalence of the loss.”).
[11] See Stewart et al., Crypto 2.0: The New Administration recasts the panorama for Crypto, The Nationwide Regulation Journal (Feb. 21, 2025) accessible right here.
Joel Cohen, Brent Wible, and Ladan Stewart are Companions, Marietou Diouf is Counsel, and Robert Denault and Elisha Mvundura are Associates at White & Case LLP.
The views, opinions and positions expressed inside all posts are these of the writer(s) alone and don’t characterize these of the Program on Company Compliance and Enforcement (PCCE) or of the New York College Faculty of Regulation. PCCE makes no representations as to the accuracy, completeness and validity or any statements made on this web site and won’t be liable any errors, omissions or representations. The copyright of this content material belongs to the writer(s) and any legal responsibility on the subject of infringement of mental property rights stays with the writer(s).
by Joel Cohen, Brent Wible, Ladan Stewart, Marietou Diouf, Robert Denault, and Elisha Mvundura
High left to proper: Joel Cohen, Brent Wible and Ladan Stewart, Backside left to proper: Marietou Diouf, Robert Denault and Elisha Mvundura (Photographs courtesy of White & Case LLP).
On April 7, 2025, Deputy Legal professional Basic Todd Blanche issued a memorandum instructing federal prosecutors to stop pursuing “litigation or enforcement actions which have the impact of superimposing regulatory frameworks on digital belongings,” noting that regulators and never prosecutors will “do that work exterior the punitive felony justice framework.”[1] Beneath the brand new coverage, the Justice Division will prioritize investigations and prosecutions involving people who defraud buyers in digital belongings or who use digital belongings in furtherance of different crimes, together with offenses associated to terrorism, narcotics trafficking, human trafficking, organized crime, hacking, and cartel and gang financing. The memorandum signifies that the Justice Division plans to shut all ongoing investigations which might be inconsistent with the brand new coverage.
Since taking workplace, President Trump has promised to “finish the regulatory weaponization in opposition to digital belongings.”[2] In furtherance of that aim, the President issued two Govt Orders containing directives aligned with the steerage within the current Justice Division memorandum. Govt Order 14178 duties the Justice Division and others with defending and selling (1) the flexibility of particular person residents and private-sector entities alike to entry and use for lawful functions open public blockchain networks with out persecution and (2) truthful and open entry to banking companies for all law-abiding particular person residents and personal sector entities alike.[3] Individually, Govt Order 14157 directs the Justice Division to prioritize instances involving the usage of digital belongings in furtherance of illegal conduct by cartels, Transnational Legal Organizations, Overseas Terrorist Organizations, and Specifically Designated World Terrorists.[4]
In keeping with the Govt Orders, the brand new memorandum instructs federal prosecutors to think about the next components when deciding whether or not to pursue felony costs involving digital belongings:
- Prosecutors will prioritize investigations and enforcement actions in opposition to people who (a) trigger monetary hurt to buyers and shoppers; and/or (b) use digital belongings in furtherance of felony conduct.
- Prosecutors shouldn’t cost “regulatory violations” in instances involving digital belongings—outlined to incorporate unlicensed cash transmitting beneath 18 U.S.C. §1960(b)(1)(A) and (B), violations of the Financial institution Secrecy Act, unregistered securities providing violations, unregistered broker-dear violations, and different violations of the registration necessities beneath the Commodity Alternate Act—until there’s proof the defendant knew of the licensing or registration requirement and willfully violated it.
- Prosecutors shouldn’t cost violations of the Securities Act of 1933, the Securities Alternate Act of 1934, the Commodity Alternate Act, or the rules promulgated pursuant to those acts in instances the place (a) the cost would require the Justice Division to litigate whether or not a digital asset is a safety or commodity, and (b) there’s an enough different felony cost accessible.[5]
Prosecutors who pursue instances that contain exceptions to those insurance policies should first acquire approval from the Deputy Legal professional Basic. Whereas the memorandum signifies that regulatory violations ought to be pursued by regulatory businesses, the director of least one regulatory company—Caroline Pham, Appearing Chairman of the Commodity Futures Buying and selling Fee (CFTC)—issued a press launch instructing the CFTC enforcement division and workers to adjust to most of the provisions within the newly introduced Justice Division coverage.[6] In the meantime, the SEC has made clear from the early days of the Trump administration that its enforcement efforts within the digital asset house shall be restricted to fraud instances and the company has systematically closed or dismissed ongoing enforcement issues based mostly on non-fraud regulatory violations.[7]
The brand new memorandum represents a shift in tone and emphasis on the Justice Division in relation to digital belongings, in addition to a major redistribution of prosecutorial assets. The Division’s Nationwide Cryptocurrency Enforcement Group is disbanded, and the Fraud Part’s Market Integrity and Main Frauds Unit is directed to stop cryptocurrency enforcement. Nonetheless, the Division’s felony enforcement involving cryptocurrency will proceed. The Division will proceed to pursue and prioritize funding frauds and different fraud schemes involving cryptocurrency that victimize buyers, in addition to cash laundering and illicit finance schemes involving cryptocurrency, notably the place such schemes relate to cartels, transnational felony organizations (TCOs), human trafficking and human smuggling, or terrorism. The memorandum additionally signifies that prosecutors will proceed to pursue felony instances the place exchanges or wallets are hacked, ensuing within the theft of digital belongings.
The brand new steerage is unclear, nevertheless, in relation to the Justice Division’s strategy to cryptocurrency exchanges and different platforms. The memorandum states that the Division “will not goal digital foreign money exchanges, mixing and tumbling companies, or offline wallets for acts of their finish customers or unwitting violations of rules—besides to the extent the investigation is per the priorities articulated” within the memorandum. The memorandum additional states that the Division “won’t pursue actions in opposition to the platforms that felony enterprises make the most of to conduct unlawful actions.” Nevertheless, in describing the circumstances wherein prosecutors can pursue registration and Financial institution Secrecy Act costs in opposition to platforms—i.e., the place a platform knew of a regulatory requirement and willfully violated it—the steerage leaves a viable pathway for prosecutors to deliver enforcement actions in opposition to digital belongings platforms, notably given the Monetary Crimes Enforcement Community’s (FinCEN) longstanding steerage about how rules referring to cash companies companies (MSBs) apply to enterprise fashions involving digital currencies.[8] Taken collectively, this facet of the memorandum and FinCEN’s regulation of sure digital foreign money companies as MSBs counsel that exchanges and different platforms will proceed to face enforcement threat. Regardless of readability on sure important factors about the way forward for DOJ crypto enforcement, a lot stays unsettled and would require nuanced evaluation following Justice Division exercise going ahead to know the scope of those adjustments.
As famous, the memorandum instructs prosecutors to shut ongoing investigations which might be inconsistent with the coverage. Time will inform whether or not the Division will apply the coverage to charged and pending instances as effectively. Final month, the President pardoned a number of people, together with an trade, that had been convicted of violating the Financial institution Secrecy Act.[9]
The steerage additionally focuses on asset forfeiture and utilizing the remission course of in cryptocurrency instances to compensate victims. Particularly, it highlights that, beneath the remission rules, digital asset investor victims are in a position to get well solely the worth of their digital belongings on the time the fraud was dedicated.[10] The steerage directed the Division’s Workplace of Authorized Coverage and Workplace of Legislative Affairs to judge and suggest legislative and regulatory adjustments to handle this subject and probably permit victims to obtain extra compensation the place the worth of digital belongings will increase after the fraud was full and the victims would have benefited from these beneficial properties if not for the fraud. This strategy could sign a broader curiosity—past instances involving digital belongings—in prioritizing white collar instances the place there are victims—together with all kinds of funding fraud schemes.
The coverage continues the Trump Administration’s development of adopting a crypto-friendly regulatory strategy. For years, proponents of digital belongings have criticized “regulation by enforcement” by the SEC and different regulatory businesses, arguing that reliance on enforcement actions to manage digital belongings has resulted in an setting hostile to innovation and conducive to fraud.[11] The Justice Division’s new coverage, which targets “regulation by prosecution,” seems to be extension of that rallying cry. Even beneath the brand new coverage, nevertheless, the Justice Division will proceed to prioritize fraud, cash laundering, and hacking instances involving cryptocurrency, and will even proceed to carry digital asset platforms accountable when, for instance, they willfully fail to register with FinCEN and implement an efficient anti-money laundering program. In spite of everything, a platform that fails to implement such a program—like every monetary establishment that fails to take action—is all of the extra probably for use by terrorists, cartels, human smuggling organizations, and different TCOs.
[1] Dep’t of Justice, Ending Regulation By Prosecution (April 7, 2025) accessible right here.
[2] See id.
[3] Exec. Order Strengthening American Management in Digital Monetary Expertise (Jan. 23, 2025) accessible right here.
[4] Exec. Order Designating Cartels and Different Organizations as Overseas Terrorist Organizations and Specifically Designated World Terrorists (Jan. 20, 2025) accessible right here.
[5] Dep’t of Justice, Ending Regulation By Prosecution (April 7, 2025) accessible right here.
[6] CFTC, Appearing Chairman Pham Lauds DOJ Coverage Ending Regulation by Prosecution of Digital Belongings Trade and Directs CFTC Employees to Adjust to Govt Orders (Apr. 8, 2025) accessible right here.
[7] Assertion, Comm’r Hester M. Peirce, Getting Again on Base: Assertion of Commissioner Hester M. Peirce on the Dismissal of the Civil Enforcement Motion In opposition to Coinbase (Feb 27, 2025) accessible right here.
[8] Dep’t of the Treasury FinCEN, Software of FinCEN’s Rules to Sure Enterprise Fashions Involving Convertible Digital Currencies (Could 9, 2019) accessible right here; Dep’t of the Treasury FinCEN, Software of FinCEN’s Rules to Individuals Administering, Exchanging, or Utilizing Digital Currencies (March 18, 2013) accessible right here.
[9] Press Launch No. 25-010, Dep’t of Justice, World Cryptocurrency Alternate BitMEX Fined $100 Million For Violating Financial institution Secrecy Act (Jan 15, 2025) accessible right here; Donald J. Trump, Govt Grant of Clemency (March 27, 2025) accessible right here.
[10] 28 C.F.R. § 9.8(c) (“The quantity of the pecuniary loss suffered by a sufferer for which remission could also be granted is restricted to the truthful market worth of the property of which the sufferer was disadvantaged as of the date of the prevalence of the loss.”).
[11] See Stewart et al., Crypto 2.0: The New Administration recasts the panorama for Crypto, The Nationwide Regulation Journal (Feb. 21, 2025) accessible right here.
Joel Cohen, Brent Wible, and Ladan Stewart are Companions, Marietou Diouf is Counsel, and Robert Denault and Elisha Mvundura are Associates at White & Case LLP.
The views, opinions and positions expressed inside all posts are these of the writer(s) alone and don’t characterize these of the Program on Company Compliance and Enforcement (PCCE) or of the New York College Faculty of Regulation. PCCE makes no representations as to the accuracy, completeness and validity or any statements made on this web site and won’t be liable any errors, omissions or representations. The copyright of this content material belongs to the writer(s) and any legal responsibility on the subject of infringement of mental property rights stays with the writer(s).
