The shuttering of the National Cryptocurrency Enforcement Unit (NCET), a specialized joint task force led by the Justice Department, should not open the door for more criminal actors to exploit the crypto space.
Established in 2021 under President Biden, NCET was made up of prosecutors from DoJ’s money laundering and cybercrime units, along with attorneys from other government offices. While the formal collaboration between those agencies has now been dissolved, the shift may ultimately result in regulatory oversight being handled by agencies better equipped—both in terms of staffing and mandate—to handle crypto.
The disbanding was announced in a memo distributed by Deputy Attorney General Todd Blanche, who stated that law enforcement will now focus on prosecuting individuals who defraud digital asset investors, rather than pursuing cases involving larger entities like crypto exchanges.
Reverting to the Relevant Agencies
The closure of the task force will not necessarily reduce law enforcement efforts.
“The government will still go after bad actors, but the systemic stuff—exchanges and service providers—will be policed by the relevant agencies covering banks, commodities, and so forth,” said James Wester, Co-Head of Payments at Javelin Strategy & Research. “That has always seemed the more appropriate way to do things.
“Part of the issue with the previous administration wasn’t just the overzealous pursuit of cases against companies in the space,” he said. “The regulation through enforcement approach meant there were significant overlaps between agencies—not just the DoJ, but the SEC and CFPB as well. That meant that even companies trying to do the right thing ended up facing multiple agencies all investigating similar activities but with different interpretations of the law.”
Bringing Down Money Launderers
NCET was established with the mission of fighting illicit activity in crypto markets, with a particular focus on anti-money laundering enforcement. Among the cases it has worked on are an investigation into a hacker who exploited a crypto trading protocol for more than $100 million, and probes into North Korean actors who helped launder proceeds from crypto-related hacks.
Perhaps the most prominent success story for NCET is the Tornado Cash case. Tornado Cash was a cryptocurrency mixer accused of facilitating more than $1 billion in money laundering transactions and laundering hundreds of millions of dollars for the Lazarus Group, a North Korean cybercrime organization. One of Tornado Cash’s co-founders was indicted in August 2023 and is scheduled to go to trial in July; the other co-founder has yet to be located.
