Democrats Press DOJ Deputy Over Crypto Holdings, Enforcement Retreat

Six Democratic senators have accused Deputy Attorney General Todd Blanche of violating conflict-of-interest law by dismantling crypto enforcement while holding substantial digital assets.

In a letter sent 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 may have violated federal conflict-of-interest law, citing financial disclosures showing he held between $158,000 and $470,000 in crypto when he issued a policy memo easing oversight of the industry.

The lawmakers pointed to 18 U.S.C. § 208(a), which prohibits executive branch officials from participating in decisions that could affect their personal financial interests.

“At the very least, you had a glaring conflict of interest and should have recused yourself,” they wrote.

Blanche allegedly held the crypto in Bitcoin and Ethereum when he issued last year’s memo titled “Ending Regulation by Prosecution,” despite promising to divest “as soon as practicable” in February 2025.

The Deputy AG’s memo disbanded the National Cryptocurrency Enforcement Team, declaring the DOJ would no longer pursue criminal cases against crypto exchanges, mixing services, or cold wallet holders for “acts of their end users or unwitting violations of regulations.” 

Rather than fully liquidating his holdings, Blanche “sold or transferred” his crypto assets to relatives, raising concerns that the divestment failed to eliminate potential financial influence, the senators allege.

The letter demanded that Blanche explain what was “appropriately flagged, addressed, and cleared in advance,” provide records of communications with crypto representatives between March 5 and April 7, and why he waited until May 31 to divest. 

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

“It’s not automatically improper for a senior DOJ official to hold some crypto, but it becomes inherently risky when that same official is personally dialling up or down crypto enforcement while sitting on a sizeable bag,” Hong Kong Web3 Association co-chair Joshua Chu told Decrypt.

“Against a backdrop of perfectly timed trades, an ethics investigation is the bare minimum,” he added.

“You can almost see the 2026 midterms from here: if DOJ crypto enforcement is already entangled with insider-style flows and prediction-market bets,” Chu said, warning it could spiral into crypto-linked intel leaks, impeachment talk, and even treason claims in late 2026 and early 2027.

The senators said they had warned in their prior letter that “disbanding the National Cryptocurrency Enforcement Team and taking a hands-off approach to crypto platforms would enable sanctions evasion, drug trafficking, scams, and child exploitation.”

“Unfortunately, our predictions have proven correct,” the senators said, citing a January 2026 Chainalysis report that showed illicit crypto activity surged 162% last year, aligning their concerns about national security risks.

“While this story has drawn attention because it involves digital assets, the underlying issue isn’t unique to cryptocurrency—it’s about transparency and potential conflicts of interest,” Joe Ciccolo, Founder & President of BitAML, told Decrypt.

“Public officials routinely hold a wide range of assets, from real estate to individual stocks and business interests,” Ciccolo said, adding that calling this undue influence is a stretch without evidence of a “specific business venture or direct transactional relationship.”

Decrypt has reached out to the DOJ for further comment.