A newly released memo from the US Department of Justice (DOJ) has caused quite a stir in the cryptocurrency industry by signaling a major policy shift under President Donald Trump. The memo outlines a pullback from aggressive enforcement strategies adopted under Biden.
The DOJ memo, released last week, clearly distances the department from the previous administration’s “regulation by litigation” approach. Instead, it reaffirms that the DOJ will no longer pursue cases that impose regulatory frameworks on digital assets; that task belongs to agencies explicitly tasked with overseeing the industry, it says.
“The Department of Justice is not a digital asset regulator,” Assistant Attorney General Todd Blanche said in the document, adding, “The previous administration used the Department of Justice to pursue a reckless strategy that was poorly designed and poorly executed.”
Going forward, the Justice Department will focus on prosecuting cases where investors are directly harmed or digital assets are used in crimes like terrorism or cyberattacks. The memo makes it clear that marketplace intermediaries, which are platforms that facilitate crypto transactions, will not be targeted unless they are used by malicious actors for illicit purposes.
As part of the policy overhaul, the DOJ disbanded the National Cryptocurrency Enforcement Team (NCET), which was established in 2022 to support prosecutions involving crypto-related crimes.
Legal experts say the memo could have a significant impact on ongoing litigation. “There are a number of investigations and prosecutions that would not be open today if this guidance had been followed,” Samson Enzer, a partner at Cahill Gordon & Reindel LLP and a former federal prosecutor, said in an interview. “I would predict that investigations would be closed and probably some charges would be dropped.”
Defense attorneys have already cited the memo in their calls for prosecutors to drop ongoing investigations, Enzer added.
One of the most high-profile cases potentially affected involves Terraform Labs founder Do Kwon, who faces multiple federal charges including conspiracy to commit money laundering. Kwon’s attorney brought up the DOJ memo during a recent hearing, suggesting it could support pretrial motions. But prosecutors have said they have no plans to change the charges, which carry a sentence of up to 130 years in prison.
Katherine Reilly, a partner at Pryor Cashman and a former federal prosecutor, said the memo could affect some prosecutions, but high-profile cases like Kwon’s probably would not. “I don’t think there’s anything in this case that runs counter to the structures that the memo laid out,” she said.
*This is not investment advice.
