What You Need to Know:
- The Department of Justice (DOJ) has signaled its approach to digital assets, clarifying that in at least some cases, regulatory violations—such as unlicensed money transmitting—will not be charged as crimes absent proof of willfulness, meaning the defendant knew of and intentionally violated the legal requirement.
- DOJ guidance now provides some potential comfort for developers of decentralized software: the DOJ will decline new 18 U.S.C. § 1960(b)(1)(C) charges in certain circumstances against those who develop tools that are truly decentralized, solely enable peer-to-peer transactions, and do not give any third party custody or control over user assets, so long as there is no criminal intent.
- The DOJ nonetheless remains focused on prosecuting bad actors—particularly those with knowledge of criminal proceeds or who knowingly facilitate illicit activity—underscoring the need for robust compliance and monitoring protocols.
On August 21, 2025, Acting Assistant Attorney General Matthew R. Galeotti delivered remarks at the American Innovation Project (AIP) Summit in Jackson, Wyoming.1 2 Mr. Galeotti's remarks focused on the digital asset ecosystem and the Department of Justice's (DOJ) enforcement priorities. Importantly, Mr. Galeotti reaffirmed earlier DOJ guidance3 that, in cases involving digital assets, the DOJ would not charge regulatory violations as crimes absent a showing of willfulness—that is, "evidence that a defendant knew of the specific legal requirement and willfully violated it"—and specifically identified unlicensed money transmitting under 18 U.S.C. §§ 1960(b)(1)(A) and (B) as examples of statutes where regulatory violations could have been used to generate criminal charges.4 Mr. Galeotti also outlined new guidance on how the DOJ will approach § 1960(b)(1)(C), explaining that the DOJ will decline new charges against developers of software that is truly decentralized, solely automates peer-to-peer transactions, and does not give any third party custody or control over user assets. Mr. Galeotti's remarks underscored the DOJ's aim to root out bad actors while protecting good-faith innovators—an approach designed to give legitimate businesses greater comfort that enforcement will focus on intent.
AAG Galeotti's Remarks
Mr. Galeotti began his remarks at the AIP Summit by invoking the April 7, 2025, memorandum from Deputy Attorney General Todd Blanche titled "Ending Regulation By Prosecution" ("Blanche Memo"),5 which underscored the DOJ's commitment to being "prosecutors, not regulators and not legislators." The Blanche Memo directed the DOJ to end "regulation by prosecution" in the digital asset space—that is, generally ceasing to target "virtual currency exchanges, mixing and tumbling services, and offline wallets for the acts of their end users or unwitting violations of regulations."6 7
Consistent with the Blanche Memo, Mr. Galeotti's AIP Summit remarks reiterated that the DOJ will not use criminal indictments to create new regulatory frameworks for digital assets because due process requires that "[c]riminal laws must give fair notice of what is illegal."
To that point, Mr. Galeotti acknowledged that the industry continued to seek clarity from the DOJ on its policies and, in particular, had concerns about "holding developers of smart contracts criminally liable for operating unlicensed 'money transmitting' businesses." In response, Mr. Galeotti emphasized that intent is the cornerstone of the DOJ's charging decisions and stated unequivocally that "merely writing code, without ill-intent, is not a crime. Innovating new ways for the economy to store and transmit value and create wealth, without ill-intent, is not a crime." For example, Mr. Galeotti clarified that secondary liability (aiding and abetting, conspiracy) required specific intent to find guilt and that "merely contribut[ing] code to an open-source project, without [specific intent]," was not enough to establish criminal liability. That said, Mr. Galeotti reassured the audience that the DOJ would continue to prosecute "those who knowingly commit crimes—or who aid and abet the commission of crimes," given that "[w]hen bad actors exploit new technologies, it undermines public trust in those technologies and stifles innovation."
Mr. Galeotti then provided additional guidance on the DOJ's application of 18 U.S.C. § 1960 in the digital asset context. He explained that the DOJ will only pursue charges under §§ 1960(b)(1)(A) or (B)—which relate to state licensing and federal registration requirements—when there is evidence a defendant knew of the licensing and registration requirements and willfully violated them. Mr. Galeotti noted that § 1960(b)(1)(C), which covers transmitting funds known to be criminal proceeds or intended for unlawful use, may still be used "under certain circumstances," although he clarified that the DOJ would decline new § 1960(b)(1)(C) charges against developers of software that is "truly decentralized," solely automates peer-to-peer transactions, and does not give any third party "custody or control over user assets." This guidance was specific to § 1960(b)(1)(C) charges, however, and Mr. Galeotti clarified that "if criminal intent is present, other charges may be appropriate" and the DOJ would consider "[a]ll of a subject's conduct and the services they provide end-to-end."
Finally, Mr. Galeotti concluded by noting for the audience that "developers of neutral tools, with no criminal intent, should not be held responsible for someone else's misuse of those tools" and that "[i]f a third-party's misuse violates criminal law, that third-party should be prosecuted—not the well-intentioned developer." Then, by way of example, Mr. Galeotti highlighted recent DOJ actions to combat illicit finance and protect investors in the digital asset space, including the prosecution of multiple members of a China-based money laundering syndicate operating out of Los Angeles, the filing of a civil forfeiture complaint against $225 million linked to cryptocurrency investment fraud and money laundering schemes, and the prosecution of a defendant for running a Ponzi scheme that falsely promised investors outsized returns through AI-powered crypto trading bots.
Mr. Galeotti's remarks were intended to provide clarity as to DOJ charging policies in an uncertain area. By elaborating on the Blanche Memo's commitment to "ending regulation by prosecution" and laying out a framework that involves potentially greater degrees of evidence—and explicitly stating that "writing code, without ill-intent, is not a crime"—the DOJ may be signaling a narrower enforcement posture.
At the same time, however, Mr. Galeotti signaled the DOJ's continued focus on prosecuting bad actors. As such, the DOJ indicated its intent to continue to pursue cases involving knowledge of criminal proceeds under § 1960(b)(1)(C), as well as fraud and money laundering statutes—making clear that while good-faith innovation may not be a priority for prosecution, companies and individuals who knowingly facilitate illicit activity remain squarely in the DOJ's crosshairs.
Key Takeaways for Companies
Mr. Galeotti's speech attempted to provide additional clarity on the DOJ's considerations for opening, investigating, and resolving cases against unlicensed money services businesses or other financial technology companies. In light of Mr. Galeotti's speech, companies should consider the following:
- Expect prioritization of investor harm and illicit finance cases. The DOJ will likely keep focusing on embezzlement/misappropriation, investment scams, hacks, and exploitation of smart contract vulnerabilities, as Mr. Galeotti recapped with recent Criminal Division actions, consistent with the Blanche Memo's priority list. Where their risk profiles overlap with these areas of focus, companies should consider strengthening efforts such as forensics, victim restoration, and law enforcement referral capabilities.
- Document decentralization and lack of control. For software involving non‑custodial tools, contemporaneously document governance, key management, admin controls (or lack thereof), and automated execution to support the position that the software "solely automates peer‑to‑peer transactions" and does not give any third party custody or control—the factors Mr. Galeotti identified for declining § 1960(b)(1)(C) charges against developers.
- Assess risks posed by knowledge of software use. Galeotti noted that the DOJ may continue to bring cases under § 1960(b)(1)(C), which prohibits the transmission of funds that the defendant knows are derived from criminal offenses, and the recent Storm case illustrates how knowledge of a platform's use by criminals can be outcome determinative in litigation.8 As such, companies should implement robust monitoring and escalation protocols to identify red-flag activity, document steps taken to prevent misuse, and ensure internal communications and governance records document how the company responds to risk events.
- Ensure proper licensing and regulatory compliance where needed. Businesses should ensure they invest in licensing and other regulatory compliance, as needed, to ensure they are not targeted by the DOJ or civil enforcement agencies. This includes registration requirements under Section 5330 of title 31, United States Code (or regulations prescribed under such section) as well as state law.
While the DOJ appears to be narrowing its enforcement posture for good-faith innovators, some state attorneys general remain focused on crypto and are actively pursuing cases against crypto companies. This mixed regulatory landscape should be accounted for when analyzing risks related to contemplated changes, based on the DOJ's most recent guidance.
Footnotes
1 Department of Justice, Acting Assistant Attorney General Matthew R. Galeotti Delivers Remarks at the American Innovation Project Summit in Jackson, Wyoming (August 21, 2025), https://www.justice.gov/opa/speech/acting-assistant-attorney-general-matthew-r-galeotti-delivers-remarks-american.
2 Launched shortly before its inaugural AIP Summit and backed by key crypto stakeholders, the American Innovation Project is a nonprofit organization focused on promoting informed, nonpartisan dialogue on critical innovation and technology policy issues. See American Innovation Project, American Innovation Project Launches as Educational Resource for U.S. Leaders Addressing Technology Challenges of the 21st Century (August 19, 2025), https://www.americaninnovationproject.org/news-updates/aip-launch; American Innovation Project, About (last accessed September 9, 2025), https://www.americaninnovationproject.org/about-1. The stated goal of the AIP Summit was to "bring[] together respected policymakers and regulators with technology industry leaders for conversations about emerging technologies – like blockchain, artificial intelligence, decentralized finance, and digital infrastructure." See American Innovation Project, Acting Assistant Attorney General of the Department of Justice Criminal Division Matthew R. Galeotti to Deliver Remarks at American Innovation Project Summit (August 20, 2025), https://www.americaninnovationproject.org/news-updates/doj-remarks-at-american-innovation-project-summit.
3 Department of Justice, DAG Todd Blanche Memorandum: Ending Regulation By Prosecution (April 7, 3 2025), https://www.justice.gov/dag/media/1395781/dl?inline.
4 Supra note 1.
5 Id.
6 See WilmerHale, The First 100 Days and Beyond of the Trump 2.0 Administration: Crypto Developments Overview (May 21, 2025), https://www.wilmerhale.com/en/insights/client-alerts/20250521-the-first-100-days-and-beyond-of-the-trump-2-administration-crypto-developments-overview.
7 Supra note 3.
8 See Department of Justice, Founder Of Tornado Cash Crypto Mixing Service Convicted Of Knowingly Transmitting Criminal Proceeds (August 6, 2025), https://www.justice.gov/usao-sdny/pr/founder-tornado-cash-crypto-mixing-service-convicted-knowingly-transmitting-criminal.
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