DOJ Crypto Enforcement Under Fire as Blanche Conflict Allegations Surface
Six Democratic U.S. senators accuse Deputy Attorney General Todd Blanche of a glaring conflict of interest after ProPublica reported he held crypto while signing a DOJ memo that dismantled the National Cryptocurrency Enforcement Team (NCET). The senators claim Blanche owned BTC, ETH, and SOL and promoted the rollback of crypto enforcement via a memo titled “Ending Regulation by Prosecution.”
They argue the conflict is worse because Blanche signed an ethics agreement in Feb 2025 to divest within 90 days and not participate in matters affecting his digital-asset interests. ProPublica says the DOJ enforcement rollback memo was issued in Apr 2025—before divestment was completed. Reportedly, the portfolio rose during the window, with BTC gains estimated around +34% (about $105,000). Blanche later exited by transferring holdings to adult children and a grandchild rather than fully liquidating, which ethics experts say may be technically compliant but conflicts with the spirit of recusal rules.
The senators also point to a Jan 2026 Chainalysis report claiming illicit crypto activity rose +162% year over year, arguing the rollback had negative consequences. They demand internal ethics-review communications and records related to crypto contacts and the memo. The DOJ said the issues were properly flagged, addressed, and cleared but gave no specifics. For traders, this controversy can swing sentiment between “regulatory relief” narratives and renewed compliance scrutiny, adding headline risk to spot BTC, ETH, and SOL.
Neutral
While the allegations target the DOJ’s internal decision-making rather than directly changing crypto laws, the dispute could quickly affect market sentiment. In the short term, “regulatory rollback” headlines may support risk-on trading in BTC, ETH, and SOL, but the ethics and conflict-of-interest angle raises the probability of follow-on scrutiny, hearings, or enforcement-policy reversals—shifting sentiment back toward compliance pressure. Over the longer term, the outcome will depend on what investigators and courts conclude, so price impact is more likely to be headline-driven and two-sided rather than one-directional. Since the story mainly adds governance and regulatory uncertainty without an immediate, clearly enforceable new rule, the net expected effect on the mentioned coins is neutral.