The Department of Justice (DOJ) is reviewing and altering the way it approaches DOJ cryptocurrency enforcement. Rather than employing a one-size-fits-all regulatory approach, they’re casting their nets wider to recover more stolen assets and prosecute higher-value, serious offenses. On April 7, Treasury Department officials announced the disbandment of the department’s national cryptocurrency enforcement team. They further launched a review of all existing cases to bring them in line with the new policy. The DOJ is indeed prosecuting these cases — perhaps to clarify its (or anyone’s) role in the digital asset space. Simultaneously, it could fulfill Biden administration goals of quelling past criticisms over its approach to crypto-related crimes.

New Policy Objectives

The new directive requires the DOJ to pursue cases that return as much money as possible to victims. These lawyers will focus on rooting out crimes related to cryptocurrencies. This goal is part of a larger attempt to build faith and reliability in the expanding digital asset market. Commissioning such research will help the department to develop investor confidence by showing a strong commitment to protecting individuals from fraud and other forms of illicit activity.

In a related action, the DOJ is reconsidering its role in setting regulatory priorities and frameworks for digital assets. The department favors letting “real regulators” set the agenda, and they will lead the charge in setting the regulatory framework. This ruling underscores how regulating an interconnected world requires a different kind of specialized expertise. It acknowledges that these resources go further than the DOJ’s primary mission.

"not a digital assets regulator" - memo by Deputy Attorney General Todd Blanche (implied)

As part of this new approach, the DOJ is actively reviewing ongoing investigations to ensure they align with the revised policy. Cases that do not uphold the end goal of victim restitution and targeted enforcement should be closed. This process highlights the DOJ’s dedication to simplifying its work and focusing attention and resources on cases that will have the most significant effect.

Controversial Pardons

The DOJ’s reverse in crypto strategy comes amid other notable recent White House pardons that have drawn ire. One of those pardoned was Ross Ulbricht, the founder of the famed darknet marketplace Silk Road. Ulbricht was found guilty for enabling the sale of narcotics and malicious hacking software. He didn’t just look the other way while hundreds of millions of dollars were laundered through the platform—he engaged in billions himself.

The DOJ had pardoned three co-founders of BitMEX, a cryptocurrency derivatives exchange. These people had recently plead guilty to helping launder the proceeds from a hack of the cryptographic currency ethereum. Beyond that, they were discovered to have let users in sanctioned countries transact on the platform, breaking international law. These pardons have further underscored the impression that the DOJ may not be serious about holding bad actors accountable for more consequential cryptocurrency-related offenses.

Binance and Regulatory Compliance

Unlike the pardons, the DOJ has raised the bar on enforcement against corporate actors who intentionally breach regulatory standards. The complaint against Binance, at the time the world’s largest cryptocurrency exchange, illustrates this approach perfectly. In doing so, Binance admitted that it willfully violated the Bank Secrecy Act. The company had neglected to install and ensure an adequate anti-money laundering program.

The DOJ’s investigation found that Binance intentionally ignored or tried to avoid widely recognized regulatory obligations. This behavior fostered an atmosphere ripe for improper financial activities, poisoning the trust we have in the cryptocurrency market. The DOJ’s actions against Binance show that the DOJ remains dedicated to enforcing our current laws and regulations in the digital asset space.