The US Department of Justice (DoJ) is scrapping a team set up three-and-a-half years ago to spearhead efforts to tackle cryptocurrency-related crimes.
The National Cryptocurrency Enforcement Team (NCET) was created to tackle complex investigations and prosecutions of criminal misuses of cryptocurrency, particularly crimes committed by virtual currency exchanges, mixing and tumbling services (tools that obscure the origins and destinations of crypto transactions), and money laundering infrastructure providers.
But in a memo – titled ‘Ending Regulation By Prosecution’ – sent to all DoJ employees, deputy attorney-general Todd Blanche states that the NCET ‘shall be disbanded effective immediately.’
The memo is framed in the context of the executive order signed by Donald Trump three days into his second term as US president titled ‘Strengthening American Leadership in Digital Financial Technology’. The executive order, signed on 23 January, revoked an executive order on digital assets under Joe Biden’s administration in March 2022,
‘As noted in Executive Order 14178, clarity and certainty regarding enforcement policy “are essential to supporting a vibrant and inclusive digital economy and innovation in digital assets”,’ Blanche’s memo states. ‘President Trump has also made clear that “[w]e are going to end the regulatory weaponization against digital assets.”
“The Department of Justice is not a digital assets regulator,’ the four-page memo, dated 7 April, continues. ‘However, the prior Administration [a reference to Joe Biden’s presidency] used the Justice Department to pursue a reckless strategy of regulation by prosecution, which was ill conceived and poorly executed.’
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Changing focus
The scrapping of the NCET is communicated in a short section of the memo titled ‘Shifting Resources Relating To Digital Assets.’
‘US Attorneys’ Offices will use long-recognized criminal justice tools to lead appropriate prosecutions consistent with the foregoing enforcement priorities and charging consideration,’ this part of the memo states. ‘Consistent with the narrowing of the enforcement policy relating to digital assets, the Market Integrity and Major Frauds Unit shall cease cryptocurrency enforcement in order to focus on other priorities, such as immigration and procurement frauds. The National Cryptocurrency Enforcement Team (NCET) shall be disbanded effective immediately. The Criminal Division’s Computer Crime and Intellectual Property Section (CCIPS) will continue to provide guidance and training to Department personnel and serve as liaisons to the digital asset industry.’
The memo’s opening section outlines the broader political context.
‘The Justice Department will no longer pursue litigation or enforcement actions that have the effect of superimposing regulatory frameworks on digital assets while President Trump’s actual regulators do this work outside the punitive criminal justice framework,’ Blanche states. ‘Rather, consistent with President Trump’s directives and the Justice Department’s priorities, the Department’s investigations and prosecutions involving digital assets shall focus on prosecuting individuals who victimize digital asset investors, or those who use digital assets in furtherance of criminal offenses such as terrorism, narcotics and human trafficking, organized crime, hacking, and cartel and gang financing.’
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NCET’s journey
The DoJ announced the NCET’s creation in October 2021, with Eun Young Choi named as the team’s inaugural director in February 2022.
But the NCET was ‘merged into’ CCIPS in July 2023 ‘creating a single office that consolidates the Criminal Division’s expertise in all aspects of fighting cybercrime’, then-principal deputy assistant attorney-general Nicole Argentieri explained in a speech the same month (July 2023). Choi has since been deputy assistant attorney-general in the DoJ’s National Security Division. She was succeeded by Claudia Quiroz, previously a NCET deputy director, and who is now CCIPS deputy chief.
“Within CCIPS, NCET will continue its mission,” Argentieri said in July 2023. “NCET will investigate and, where appropriate, prosecute criminal offenses involving the abuse of cryptocurrency. That includes, in partnership with the Criminal Division’s Money Laundering and Asset Recovery Section (MLARS), investigating and prosecuting cryptocurrency exchanges that facilitate money laundering. As has always been the case, NCET will leverage MLARS expertise in money laundering, Bank Secrecy Act and financial institution cases, and digital asset seizure and forfeiture by continuing to collaborate with MLARS in these areas.”
Argentieri – who joined law firm Cravath, Swaine & Moore earlier this year – described NCET in her 2023 speech as “the government’s most impressive collection of cryptocurrency-knowledgeable criminal lawyers, equipped with a deep understanding of the technology, business, and legal sides of cryptocurrency”; said the team had “quickly generated results”; and that it was “now time to bring NCET to the next level.”
“NCET has been an enormously successful start-up,” she said. “Merging it into CCIPS will give it the resources and runway to accomplish even more.”
Global Government Fintech’s coverage of Donald Trump’s fintech-related initiatives
Digital asset-related moves
The decision to scrap the NCET comes just a few weeks after the Securities & Exchange Commission (SEC) announced the creation of a ‘Cyber and Emerging Technologies Unit’ to focus on ‘combatting cyber-related misconduct and protecting retail investors from bad actors in the emerging technologies space.’
The new unit replaces the SEC’s Crypto Assets and Cyber Unit. It consists of about 30 anti-fraud specialists and attorneys from multiple SEC offices using their ‘substantial fintech and cyber-related experience’ to tackle ‘misconduct’ as it relates to securities transactions in priority areas.
Also within the first week of his second presidency, Trump kicked off the work of a new presidential working group on digital asset markets. This is being chaired by David Sacks as White House artificial intelligence (AI) and crypto ‘czar’.
Blanche’s memo refers to the working group, stating that the DoJ will ‘fully participate’ via attorneys designated by the department’s senior leadership.
Last month, the president – once upon a time a cryptocurrency sceptic – signed an executive order to create a ‘Strategic Bitcoin Reserve’ and ‘Digital Asset Stockpile’; and hosted a ‘Digital Assets Summit’ (also referred to as ‘Crypto Summit’) at the White House.
