The DOJ crypto conflict reached a formal accusation this week when six Democratic senators told Deputy Attorney General Todd Blanche he had a “glaring conflict of interest” after ProPublica reported he held between $158,000 and $470,000 in Bitcoin, Ethereum, and Solana when he issued the memo disbanding the National Cryptocurrency Enforcement Team.
Summary
- Blanche signed an ethics agreement in February 2025 promising to divest within 90 days and not to participate in matters affecting his digital asset interests, then issued the enforcement rollback memo in April 2025 before divesting, during which window his Bitcoin holdings alone appreciated 34 percent
- When Blanche eventually divested, he transferred holdings to his adult children and a grandchild rather than liquidating them outright, a move ethics experts told ProPublica is technically legal but against the spirit of conflict of interest law
- Senators Warren, Hirono, Durbin, Whitehouse, Coons, and Blumenthal set a February 11 deadline for Blanche to produce all communications with ethics officials and the crypto industry around the time of the memo; the Campaign Legal Center simultaneously filed a complaint with the DOJ Inspector General
ProPublica’s investigation documents that Blanche’s memo, titled Ending Regulation by Prosecution, disbanded the NCET, halted Biden-era investigations into crypto companies, and directed the DOJ to assist Trump’s crypto working group. The memo benefited the crypto industry broadly, including Blanche’s own portfolio. A DOJ spokesperson told ProPublica the actions were “appropriately flagged, addressed and cleared in advance,” without specifying who cleared them or how. The senators wrote directly to Blanche: “At the very least, you had a glaring conflict of interest and should have recused yourself.”
The NCET was established in 2022 and led the Binance investigation that resulted in a $4.3 billion settlement. Blanche’s memo disbanded it entirely and directed the Market Integrity and Major Frauds Unit to cease cryptocurrency enforcement in order to focus on other priorities including immigration and procurement fraud. Going forward, the DOJ would only pursue crypto cases involving terrorism, narcotics, human trafficking, hacking, and cartel financing. The senators cited a January 2026 Chainalysis report showing illicit crypto activity surged 162 percent the prior year, arguing their predictions about the consequences of the rollback had proven correct.
The Divestiture Problem
When Blanche transferred his crypto holdings to family members rather than selling them outright, ethics experts told ProPublica this approach was at odds with the spirit of the law. The Campaign Legal Center argued the transfers did not eliminate his potential financial interest because his family retained the appreciated assets. ProPublica calculated his Bitcoin holdings rose 34 percent between the date of the memo and the date he divested, a gain that reached approximately $105,000 on that position alone.
What the Senators Demanded and What Comes Next
As crypto.news has reported, the DOJ conflict question has become a live variable inside CLARITY Act negotiations, where Democratic senators are pushing for ethics language barring government officials from profiting from crypto. As crypto.news has noted, the federal regulatory framework is being rebuilt through financial regulators rather than criminal enforcement, a structural shift Blanche’s memo accelerated. The Inspector General complaint filed by the Campaign Legal Center remains open, and the DOJ has not responded publicly to the senators’ demand for documentation.
