Government Dismises Crypto Fraud Prosecutions; Steps Away From Intense Crypto Case Pursuit
The cryptocurrency landscape is undergoing significant changes as the Justice Department adjusts its approach to regulating digital assets.
In a surprising move, the department has disbanded its National Cryptocurrency Enforcement Team. However, this does not signal a withdrawal from cryptocurrency regulation. The department continues to actively enforce laws against digital asset crimes through civil forfeitures, indictments, and cooperation with other federal and international law enforcement agencies.
One recent example of this enforcement is the unsealing of indictments against executives of the cryptocurrency exchange Garantex, related to cybercrime activities, in collaboration with the Secret Service, FBI, and foreign law enforcement agencies.
The Biden administration has also made strides in cryptocurrency regulation. The passage of the 2025 GENIUS Act has created a clear regulatory framework for stablecoins, aiming to integrate digital currencies into the U.S. financial system. Regulatory agencies, such as the SEC, are also refining frameworks beyond enforcement alone, proposing clearer rules and consumer protections for crypto trading and custody.
Despite these changes, the Justice Department remains committed to prosecuting digital asset crimes. The department will continue to focus on investigating and prosecuting crimes that utilize cryptocurrency, such as drug and human trafficking. However, the pardoning of Nikola founder Trevor Milton and the commutation of Ozy's Carlos Watson by President Trump casts doubt on the department's commitment to this assertion.
Meanwhile, in the traditional banking world, transactions over $10,000 are scrutinized, and banks are careful to investigate the origins of funds. In contrast, cryptocurrencies are a popular new vector for fraud, as money can be sent through exchanges with lax scrutiny of clients. This lax policing may help prices rise as companies like Coinbase and Robinhood have less standing in the way of offering new products.
However, the cryptocurrency industry's potential for fraud has not gone unnoticed. The Trump administration announced plans to create a "strategic reserve" of cryptocurrency using coins seized in criminal prosecutions, an attempt to legitimize the industry. Yet, this plan has received criticism due to the volatility of cryptocurrencies.
The crypto industry has also been embroiled in controversy, with allegations of money laundering and fraud. The Justice Department under former President Biden deemed BitMEX a "money laundering platform," and the leaders of the exchange were pardoned by President Trump and sentenced to prison for failing to maintain anti-money laundering and identity verification systems.
The crypto industry's role in political elections has also come under scrutiny. Reports suggest that the industry spent hundreds of millions to elect a president that would keep the price going up. The Trump family has also been accused of stockpiling cryptocurrencies ahead of presidential announcements on loosening regulation.
In the midst of these changes, it is clear that the cryptocurrency industry will continue to be a focus for both regulation and criminal investigation. The focus is on enforcement actions, such as indictments and asset seizures, alongside establishing clearer regulatory rules governing digital assets in the U.S. financial system.
The future of cryptocurrency regulation is expected to expand, with the Biden administration advocating for clearer rules and consumer protections in crypto trading and custody. Gizmodo Tech reports that the focus will also remain on enforcing laws against digital asset crimes, such as indictments and civil forfeitures, to prevent future instances of money laundering and fraud in the technology sector.
