Senate Democrats suggest Trump officials’ crypto investments led to enforcement slowdown

Several Democrat Senators are demanding answers from a Trump Administration official who disbanded a crypto-focused team of prosecutors while holding hundreds of thousands of dollars in digital assets himself.

That decision could have violated federal conflict-of-interest laws and be punishable by up to five years in prison, the senators said in a letter addressed to the official, Deputy Attorney General Todd Blanche.

The January 28 letter was authored by six senators who have often clashed with the crypto industry, including Democrat Senator Elizabeth Warren of Massachusetts.

Last April, Blanche issued a memo stating the Department of Justice would disband the four-year-old National Cryptocurrency Enforcement Team, which spearheaded investigations and coordinated casework.

The memo also said that prosecutors would not pursue crypto exchanges, mixers, and “offline wallets” for “the acts of their end users or unwitting violations of regulations.”

At the time, it was viewed as a nudge to prosecutors in New York, who had charged crypto mixer developer Roman Storm, angering some of Trump’s allies in the crypto industry.

But the senators, many of whom are sceptical of decentralised financial protocols like crypto tumbler Tornado Cash, suggested Blanche’s decision was made to benefit Trump’s crypto businesses.

Now, they think Blanche may have done it for himself.

Recent reporting from ProPublica found that Blanche held as much as $480,000 in crypto at the time he issued his memo. Despite an earlier promise to divest his crypto holdings “as soon as practicable,” he didn’t begin selling them until late May.

“The fact that you held substantial amounts of cryptocurrency at the time you made this decision calls into question your own motivations,” the senators wrote.

The Campaign Legal Center, a nonpartisan public interest group, filed a complaint against Blanche last week. In the complaint, the organisation asked the DOJ’s Office of the Inspector General — an internal watchdog — to investigate whether Blanche’s memo “benefitted the digital asset industry” and, in turn, his own crypto investments.

In a statement to ProPublica, a spokesperson for Blanche said he “upholds the highest levels of transparency and ethical standards. As such, this was appropriately flagged, addressed, and cleared in advance.”

This week, senators demanded that Blanche explain the statement, whether he followed the requisite conflict-of-interest procedures before issuing the memo, and why he took so long to begin offloading his crypto.

Aleks Gilbert is DL News’ New York-based DeFi correspondent. You can reach him at aleks@dlnews.com.