The first weeks of the Trump Administration appeared to herald a new era of cryptocurrency enforcement and regulation – namely, one in which there would be less of both. In his first week in office, the president issued an Executive Order declaring that the "digital asset industry plays a crucial role in innovation and economic development," and announcing the administration's intent "to support the responsible growth and use of digital assets, blockchain technology, and related technologies across all sectors of the economy[.]"
In short order, the Securities and Exchange Commission followed suit. In the last three months, the SEC has established its own Crypto Task Force, dropped its pending enforcement action against Coinbase, announced that "meme coins" are not considered securities, and moved to close an investigation into online brokerage Robinhood's crypto trading division.
For weeks, it seemed as though the Department of Justice was notably absent from this changing landscape. On April 8, however, Deputy Attorney General Todd Blanche issued a memo to all DOJ employees with the subject "Ending Regulation by Prosecution."
DOJ's answer to President Donald Trump's call for a change in approach to crypto enforcement, the memo decrees that the DOJ "is not a digital assets regulator" and disbands the National Cryptocurrency Enforcement Team within the DOJ.
Under this new guidance, the DOJ will "prioritize" charging those who harm "digital asset investors and consumers" and who use digital assets in furtherance of other crimes, particularly "fentanyl trafficking, terrorism, cartels, organized crime, and human trafficking and smuggling."
Prosecutors are also directed not to charge "regulatory violations"—including unlicensed money transmitting and violations of the Bank Secrecy Act—absent evidence of willfulness.
On first reading of the April 8 memo, those in the crypto industry might reasonably have concluded that the DOJ, like the SEC before it, was withdrawing from the world of crypto enforcement.
Of course, only time will tell how this guidance is implemented. But while the intent of the April 8 memo may well have been to curb the DOJ prosecutions in this space, the guidance it sets forth leaves prosecutors plenty of room to continue to pursue charges in the crypto space.
Not only will prosecutors still be able to bring cases—like the prosecution of Sam Bankman-Fried, for example—arising from fraud in the digital asset markets, but they will likely also still be able to pursue charges against crypto exchanges and other crypto players whose platforms are being used to launder the proceeds of an array of crimes.
Indeed, even in the last few months, the DOJ has pushed forward with several cases against crypto companies undertaken before President Trump took office, which may provide some guidance as to how broad the effects of the April 8 memo will be.
These cases—most notably, the recent guilty plea by OKX, one of the world's largest cryptocurrency exchanges, to criminal charges brought by the U.S. Attorney's Office for the Southern District of New York, and the continued prosecution of two of the largest crypto mixing companies in the world—do focus on criminal offenses related to the operation of unlicensed money transmitting businesses and money laundering.
But in each of those cases, the government has made allegations designed to establish the willfulness of that conduct, even where it is not a legal requirement, and, in some cases, has emphasized the use of the digital asset tools by other criminal wrongdoers.
Of course, the April 8 memo is new, and how it will be implemented remains to be seen. But these cases suggest that those in the crypto space should not assume that DOJ enforcement is no longer a source of concern.
1. The OKX Guilty Plea
On Feb. 24, 2025, just about one month after the Trump administration issued its Executive Order welcoming the digital asset industry to the table, the U.S. Attorney's Office for the Southern District of New York issued a notable announcement of its own: Aux Cayes Fintech Co., Ltd., the Seychelles-based entity that operates OKX, a cryptocurrency exchange that facilitates billions of dollars in crypto transactions each day, pleaded guilty to a single count of operating an unlicensed money transmitting business and agreed to pay an $84.4 million fine and $420.3 million in forfeiture.
Notably, OKX's U.S.-based affiliate did register with FinCEN as a money services business. The information filed against OKX, however, alleged that because OKX itself accepted and transmitted cryptocurrencies, and operated "in substantial part" in the U.S., it too was required to register as a money transmitting business with FinCEN.
The information lays out detailed allegations in support of the contention that OKX was not only aware that U.S. customers traded on the exchange, but "sought out" such customers, noting that OKX was aware that its website was accessible in the U.S. and that U.S. customers could easily circumvent the company's ban on customers using U.S. IP addresses by using widely available VPN services.
OKX is also alleged to have permitted trading by certain third-party brokers, which did not disclose any identifying information about their customers. The information also points to active steps taken by OKX to encourage U.S. customers to use the exchange, including sponsoring the Tribeca Film Festival.
Although the investigation of OKX almost certainly began during the Biden administration, the resolution of the case was not announced until more than a month into the Trump administration.
Given the typical DOJ practice that corporate resolutions involve approval not only from the U.S. Attorney's Office handling the investigation, but also the Justice Department headquarters in Washington D.C., strongly suggests that the OKX resolution was approved by the newly-installed Trump administration leadership of the DOJ.
The fact that the detailed allegations in the information lay out a case for willful violation of the requirement to register with FinCEN may provide an indication as to why that approval was forthcoming; certainly, it would appear to bring the OKX case within the bounds of the April 8 DOJ guidance.
2. The Crypto Mixer Cases
Meanwhile, the DOJ is currently proceeding to trial in two other major cases against crypto players, again charging, primarily, unlicensed money transmitting and money laundering violations.
Both cases involve cryptocurrency tumbling or mixing services, which allow customers to mix crypto from multiple sources before returning it to particular wallets, in an effort to anonymize the sources of the funds.
In U.S. v. Storm and Semenov, 23 Cr. 430 (KPF) (S.D.N.Y.), the developers of Tornado Cash, a cryptocurrency mixer alleged to have facilitated more than $1 billion in money laundering transactions, are charged with conspiring to commit money laundering, conspiring to operate an unlicensed money transmitting business, and violating the International Emergency Economic Powers Act (IEEPA), the last by permitting the Lazarus Group, a sanctioned North Korean cybercrime organization to transact on the platform.
In U.S. v. Rodriguez and Hill, 24 Cr. 82 (RMB) (S.D.N.Y.), the founders of Samourai Wallet, a crypto mixer alleged to have executed more than $2 billion in unlawful transactions, including laundering funds traceable to dark web markets like Silk Road and Hydra Market, are similarly charged with conspiring to commit money laundering and conspiring to operate an unlicensed money transmitting business.
Both of the crypto mixer cases have been hotly litigated since they were filed. In an oral ruling issued in the fall of last year, S.D.N.Y. Judge Katherine Polk Failla denied Storm's and Semenov's motions to dismiss the Indictment, finding, among other things, that Tornado Cash could be considered a money transmitter even if it did not exercise control of customers' funds and instead facilitated the cryptocurrency transactions.
While these cases were charged during the Biden Administration, the prosecution teams appear to be actively preparing to proceed to trial in both cases, differentiating these crypto cases from, for example, charged criminal cases involving alleged FCPA violations from which the DOJ has walked away since the new Administration began.
Indeed, the Tornado Cash case is scheduled for trial in July, with the Samourai Wallet case headed to trial not long after, in November of this year.
Of course, none of this is to say that the DOJ's efforts in these cases aren't likely to be in tension with those of other parts of the federal government or even that they may be withdrawn before trial.
Indeed, one day after the Tornado Cash prosecutors filed a letter with the court about setting a schedule for the lead up to trial, the Treasury Department's Office of Foreign Asset Control announced it was removing Tornado Cash from the list of sanctioned entities.
But the charging instruments in both the Tornado Cash and Samourai Wallet cases also emphasize how the mixers were used to facilitate other criminal conduct—including conduct involving a foreign criminal actor and involving narcotics trafficking.
That focus would appear to bring these cases within the bounds of the April 8 memo from DAG Blanche, despite their being predicated on unlicensed money remitting charges, among others.
3. Conclusion
Without a doubt, those in the crypto industry are right to think that the next four years are going to be substantially different from an enforcement and regulatory perspective than the last four. The White House has fully embraced players in the digital asset markets, and the SEC naturally is not far behind.
Most recently, the DOJ's guidance on enforcement in the digital asset space seems designed to bring criminal enforcement in line with the rest of the federal government. Of course, with most criminal statutes of limitations extending longer than a presidential term, a violation that occurs today may well be prosecutable under the next president's regime, such that crypto companies cannot merely disregard the possibility of criminal or regulatory penalties.
But even beyond the possibility for future changes in enforcement priorities, crypto exchanges and operators of other crypto-driven businesses would be wise to pay close attention not just to the strong statements set forth in the April 8 memo issued by DAG Blanche but to how this new DOJ guidance is implemented in practice.
Most importantly, players in the crypto space should consult with sophisticated counsel about the requirements of the Bank Secrecy Act, what necessitates FinCEN registration, and what types of AML and KYC protocols are necessary to stay out of trouble; despite the "regulatory" nature of these subjects, the DOJ guidance appears to leave prosecutors a variety of openings to continue to pursue cases that implicate these issues.
Originally published by ALM Global Properties, LLC, 18 April 2025, edition of the "New York Law Journal" © 2025
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