Action: On April 7, Deputy Attorney General Todd Blanche issued a memorandum “Ending Regulation By Prosecution,” signaling a significant shift in the Department of Justice’s (DOJ) approach to digital assets and cryptocurrency crime enforcement. The memo states that DOJ will cease targeting virtual currency exchanges and other crypto service providers for the actions of their end users or for “unwitting” violations of regulations except in cases involving defrauding customers and investors or unlawful conduct by cartels, terrorists, or similar organizations. The memo specifically instructs prosecutors not to charge regulatory violations related to operating as an unlicensed money transmitter, violations of the Bank Secrecy Act, offering unregistered securities, and other violations unless there is evidence that the violations were committed knowingly (a relatively high standard in criminal law). It also directs prosecutors not to pursue cases that would litigate whether a digital asset is a security (subject to the jurisdiction of the SEC) or a commodity (subject to the CFTC). Finally, it directs the Market Integrity and Major Frauds Unit to cease cryptocurrency enforcement to focus on other priorities, such as immigration and procurement frauds, and disbands the National Cryptocurrency Enforcement Team, which had been created by the Biden Administration to pursue cases involving the use of digital assets.Key Insights
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