Democrats Press DOJ Deputy Over Crypto Holdings, Enforcement Retreat – Decrypt

Six Democratic senators have accused Deputy Lawyer Common Todd Blanche of violating conflict-of-interest regulation by dismantling crypto enforcement whereas holding substantial digital property.

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 might have violated federal conflict-of-interest regulation, citing monetary disclosures displaying he held between $158,000 and $470,000 in crypto when he issued a coverage memo easing oversight of the business.

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

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

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 Crew, declaring the DOJ would not pursue legal circumstances in opposition to crypto exchanges, mixing companies, or chilly pockets holders for “acts of their finish customers or unwitting violations of laws.” 

Moderately than totally liquidating his holdings, Blanche “bought or transferred” his crypto property to kin, elevating considerations that the divestment didn’t remove potential monetary affect, the senators allege.

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

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

“It’s not routinely improper for a senior DOJ official to carry some crypto, nevertheless it 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 instructed Decrypt.

“Towards 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 speak, and even treason claims in late 2026 and early 2027.

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

“Sadly, our predictions have confirmed right,” 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 property, the underlying problem is not distinctive to cryptocurrency—it is about transparency and potential conflicts of curiosity,” Joe Ciccolo, Founder & President of BitAML, instructed Decrypt.

“Public officers routinely maintain a variety of property, 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.