Earlier this month, the Ministry of Justice dissolved its national cryptocurrency -enforcement team and said it would no longer pursue what Deputy Government Attorney Todd Blanche described as “regulation of prosecution.”

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The story

The US Ministry of Justice “will no longer pursue litigation or enforcement measures that have the effect of overlaying a legislative framework on digital assets” instead of regulatory bodies that put together their own framework to oversee the sector, a 4-page memo signed by vice lawyer Todd Blanche on April 7 said. In other words, DOJ will no longer pursue “regulation by prosecution,” the note said.

Why it matters

DOJ’s memo raised concern that it could mean that criminal activities in the crypto sector would not be prosecuted, or at least prosecuted as strongly as it was over the last several years – both by dissolving the national cryptocurrency (NCET) and by changing the priorities of the entity.

Breaks down it

At a practical level is the very memoet internal guidance, but may not be a binding document. Several lawyers told Coindesk that they interpreted the guidance to indicate that DOJ would still cause fraud or other criminal cases involving crypto but would try to avoid all cases where DOJ himself had to decide whether a digital asset was a security or a product.

“Fraud is still fraud,” said Josh Naftalis, a partner at Palla’s Partners LLP and a former prosecutor at the US law firm of the southern district of New York. “This memo does not seem to say that doj will not prosecute fraud in the crypto area.”

Still, the memo was alarmed for prominent Democrats who questioned whether Doj suggested that it would allow criminal behavior. Senators Elizabeth Warren, Mazie Hirono, Richard Durbin, Sheldon Whitehouse, Christopher Coons and Richard Blumenthal wrote a letter to Blanche and said his “decision to give a free care to cryptocurrency -Hid launders” and closed NC scams and sexual demand for sexual acclamation. ”

“Specifically, the department will no longer target virtual currency exchanges, mix and tumble services and offline wallets for the actions of their end users or unconscious violation of regulations – except to the extent that the investigation is in accordance with the priorities formulated in the following sections,” the DOJ memo said, a passage referred to by the Senator’s letter.

New York Attorney General Latitia James wrote an open letter to Senate leaders in the same week and asked them to promote the legislation to tackle cryptocurrency risk. She did not specifically refer to Blanche’s memo, but detailed possible ways to improve the police to improve the sector through legislation.

Katherine Reilly, a partner in Pryor Cashman and a former prosecutor at the US Law Office of the Southern District in New York, Coindesk said that most of the major crypto cases brought by Doj in recent years would not have been affected if this guide had been in effect.

The Bitmex case in 2020, when DOJ and Commodity Futures Trading Commission brought unregistered trade and other fees against the platform, “probably closest to the line” is about being a case that may not have been brought under this guide, she said.

Trump pardoned Bitmex, its founders and a senior employee at the end of March, almost two weeks before the DOJ memo was shared.

“I think it is clear that the Ministry of Justice wants to limit the role of DOJ in regulating the crypto industry … looks beyond its role in other crimes, fraud, laundering of the revenue from drug trafficking, things like that, and kind of taking a step back from the role of trying to bring order and justice to the crypto industry as a whole,” said Reilly.

That’s “probably the intention behind the Bitmex wiring too,” she said.

Naftalis said DOJ will continue to pursue drugs, terrorism or other illegal financing fees, even during the note.

“I think the headline for the industry is to the extent that there is legal use of crypto, they will not put the guard rail at criminal enforcement,” he said. “It’s for Congress.”

A section of the memo asks prosecutors not to levy bank secret violations, unregistered securities offering violations, unregistered brokerage-retailer violations or other violations of the exchange of raw materials for violation “, unless there is evidence that the defendant knew of the license or registration requirement that has been mentioned and violated such a requirement.”

Carla Reyes, associate professor of law at Smu Dedman School of Law, Coindesk told that this can refer to recent cases where developers build tools under the impression that they did not commit unlicensed money that transfer activities under existing guidance but may be charged anyway.

“Most criminal statutes require a certain level of knowledge to define your intention and knowledge that you are committing a crime when you do,” she said. “The farther away you get from it, the less the charge, but the more intentional [and] Intentional it is, the higher the fee. “

What the memo seems to want to explicitly move away from is any suggestion that federal prosecutors would interpret how securities or raw material laws can apply to digital assets.

“Prosecutors should not charge violations of the Securities Act of 1933, Securities Exchange Act of 1934, Commodity Exchange Act or the regulations promulated according to these actions, in cases where (a) the fee requires the Ministry of Justice to show whether a digital asset is a ‘security’ or ‘raw material,’ and (b) there is a sufficient alternative criminal arrangement. Play or thread, ”Mem.

A popular criticism that was leveled to former SEC chairman Gary Gensler of the crypto industry was that he “regulated by enforcement,” rather than focusing on developing guidance to the industry to know what was or was not acceptable. Blanche seems to be referring to a similar criticism in the memo, Naftalis said, in the one -time treatment decision from SEC or DOJ should not define the protective framework for the industry.

Steve Segal, a shareholder in Buchalter, said some of DOJ’s previous cases would charge trading sites so as not to have the police for their own customers. The note now seems to suggest that if a crypto exchange leaders ran a clean platform and customers laundered funds from criminal activities, the leaders would not be charged. This is, for example, FTX, where the leaders were indicted and convicted of (or promised to blame) fraud.

“Of course, a lot of the big crypto cases we’ve seen in the last few years are kind of pure investor fraud, things like FTX. And one of the more interesting things about this memo is that it talks about cryptoinvestors and really prioritizes cases where cryptoinvestors become a victim,” Reilly said. “And then I don’t think we should conclude that this memo means that we will see much fewer cases in the crypto area, or that cryptic companies can breathe a sigh of relief that Doj is out of the picture for a few years.”

DOJ’s future cases may appear a little differently with regard to the specific accusations, but “it is far too early to say that everyone can assume that doj is out of the crypto industry,” she said.

Many of the lawyers who spoke to Coindesk agreed that the memo itself did not clarify all the different questions that had to come up with a criminal case, nor was it an end-all/all-document.

The memo announced the prosecution, but it is not in itself a law, Reyes said, adding that it can guide internal decision -making of which cases to pursue the most strongly, as well as the strategies that control these prosecutions.

Many details of how this memo ties together with Trump’s executive order of the strategic Bitcoin reserve still need to be spelled, Segal said. Sections on victim compensation and how seized funds should be handled in the memo does not explain how DOJ can handle situations where seized funds are transferred to bankruptcy, such as what happened to FTX or other similar scenarios.

“I think we really have to see how it plays out because this guide, I think, leaves prosecutors a lot of room to bring cases, even of these kinds of violations that are made as more legislative,” Reilly said. “So even though that’s the intention, I think the devil is in detail about what cases we’re looking forward to.”

Monday

• Securities and Exchange Commission and Binance were set to submit a joint status report on their discussions after a judge paused the regulator’s case against the exchange and its affiliated units and leaders in February. Last Friday, the parties asked for an extension of this deadline and the judge who monitored the case signed Monday, giving the parties until mid -June to submit a follow -up.

• (The Wall Street Journal) Binance leaders met with US Ministry of Finance’s officials in March to potentially “loosen the US government’s supervision” of the stock exchange following Binance’s guilty plea in November 2023, the journal reported. Binance accepted a court -appointed monitor as part of the placement. At the same time as last month’s discussions, Binance was in conversations with the Trump-supported world’s Liberty Financial to develop a dollar-pegged stablecoin.
• (Assets) Fortune spoke with and profiled Bo Hines, CEO of US President Donald Trump’s advisory council for digital assets.
• (CNBC) US importers see several “canceled sailing” due to a decrease in demand as a result of customs, CNBC reports.
• (The Verge) ICERAID claims to be a protocol on Solana where people can create images of “criminal illegal foreign activity” in exchange for tokens, but it does not appear to have any connection to immigration and customs enforcement (ICE), reports Verge.
• (Npr) The Department of Homeland Security recalls the triallessness of a number of migrants who tell them to self-defeat from the US citizens born in the United States, also receive these emails.
• (The New York Times) Acting IRS Commissioner Gary Shapley has been replaced after only three days on the job, after Finance Minister Scott Bessent reportedly complained to President Donald Trump that he was not consulted on Shapley’s promotion pushed by Elon Musk.

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