"Ending Regulation by Prosecution" (Deputy Attorney General memorandum)
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U.S. Department of Justice
Office of the Deputy Attorney General
The Deputy Attorney General Hflshington, D.C. 20530
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April 7, 2025
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MEMORANDUM FOR ALL DEPARTMENT EMPLOYEES
FROM: THE DEPUTY ATTORNEY GENERA!'., I
SUBJECT: Ending Regulation By Prosecution
The digital assets industry is critical to the Nation's economic development and innovation.
Thus, as noted in Executive Order 14178, clarity and certainty regarding enforcement policy "are
essential to supporting a vibrant and inclusive digital economy and innovation in digital assets."
President Trump has also made clear that "[w]e are going to end the regulatory weaponization
against digital assets."
The Department of Justice is not a digital assets regulator. However, the prior
Administration used the Justice Department to pursue a reckless strategy of regulation by
prosecution, which was ill conceived and poorly executed. The Justice Department will no longer
pursue litigation or enforcement actions that have the effect of superimposing regulatory
frameworks on digital assets while President Trump's actual regulators do this work outside the
punitive criminal justice framework. Rather, consistent with President Trump's directives and the
Justice Department's priorities, the Department's investigations and prosecutions involving digital
assets shall focus on prosecuting individuals who victimize digital asset investors, or those who
use digital assets in furtherance of criminal offenses such as terrorism, narcotics and human
trafficking, organized crime, hacking, and cartel and gang financing. 1
I. Digital Assets Enforcement Priorities
Executive Order 14178 tasks the Justice Department and others with "protecting and
promoting" (1) "the ability of individual citizens and private-sector entities alike to access and use
for lawful purposes open public blockchain networks without persecution"; and (2) "fair and open
access to banking services for all law-abiding individual citizens and private-sector entities alike."
In response to those taskings, the Justice Department will stop participating in regulation by
prosecution in this space. Specifically, the Department will no longer target virtual currency
exchanges, mixing and tumbling services, and offline wallets for the acts of their end users or
unwitting violations of regulations-except to the extent the investigation is consistent with the
priorities articulated in the following paragraphs.
1
This guidance is not intended to, does not, and may not be relied upon to create any right or
benefit, substantive or procedural, enforceable at law or in equity by any party against the United
States, its departments, agencies, or entities, its officers, employees, or agents, or any other person.
Memorandum from the Deputy Attorney General Page 2
Subject: Ending Regulation By Prosecution
The policy outlined in Executive Order 14178 requires the Justice Department to prioritize
investigations and prosecutions that involve conduct victimizing investors, including
embezzlement and misappropriation of customers' funds on exchanges, digital asset investment
scams, fake digital asset development projects such as rug pulls, hacking of exchanges and
decentralized autonomous organizations resulting in the theft of funds, and exploiting
vulnerabilities in smart contracts. Such enforcement actions are important to restoring stolen funds
to customers, building investor confidence in the security of digital asset markets, and the growth
of the digital asset industry.
Pursuant to the "total elimination" policy set forth in Executive Order 14157, entitled
Designating Cartels and Other Organizations as Foreign Terrorist Organizations and Specially
Designated Global Terrorists, the Justice Department will also prioritize cases involving use of
digital assets in furtherance of unlawful conduct by cartels, Transnational Criminal Organizations,
Foreign Tenorist Organizations, and Specially Designated Global Terrorists. For example, cartels
and human trafficking and smuggling rings have increasingly turned to digital assets to fund their
operations and launder the proceeds of their illicit businesses. The same is true of fentanyl
production: increasingly dangerous precursors purchased from China and used in the production
of fentany 1in Central and South America are often paid for using digital assets. Terrorist groups,
such as Hamas and ISIS, and nation states subject to US sanctions, like North Korea, also continue
to transact using digital assets in an attempt to conceal their financing from law enforcement. As
part of the Justice Department's ongoing work against fentanyl trafficking, terrorism, cartels, and
human trafficking and smuggling, the Department will pursue the illicit financing of these
enterprises by the individuals and enterprises themselves, including when it involves digital assets,
but will not pursue actions against the platforms that these enterprises utilize to conduct their illegal
activities.
Ongoing investigations that are inconsistent with the foregoing should be closed. The
Office ofthe Deputy Attorney General will work with the Criminal Division and EOUSA to review
ongoing cases for consistency with this policy. All previously issued policies and directives that
are inconsistent with any of the foregoing are rescinded, effective today.
II. Digital Assets Charging Considerations
Based on the foregoing priorities- while charging decisions must be based upon the facts
and evidence of each particular case- federal prosecutors are directed to consider the following
factors when deciding whether to pursue criminal charges involving digital assets:
Prosecutors shall prioritize cases that hold accountable individuals who (a) cause financial
harm to digital asset investors and consumers; and/or (b) use digital assets in furtherance of other
criminal conduct, such as fentanyl trafficking, terrorism, cartels, organized crime, and human
trafficking and smuggling. Seeking accountability from individuals who perpetrate these types of
wrongdoing deters future illegal activity, compensates victims, and promotes the public's
confidence in the digital asset markets and broader industry. On the other hand, criminal matters
premised on regulatory violations resulting from diffuse decisions made at lower levels of digital
asset companies often fail to advance the priorities of the Department.
Prosecutors should not charge regulatory violations in cases involving digital assets
including but not limited to unlicensed money transmitting under 18 U.S.C. § 1960(b)(l)(A) and
(B), violations of the Bank Secrecy Act, unregistered securities offering violations, unregistered
Memorandum from the Deputy Attorney General Page 3
Subject: Ending Regulation By Prosecution
broker-dealer violations, and other violations of registration requirements under the Commodity
Exchange Act- unless there is evidence that the defendant knew of the licensing or registration
requirement at issue and violated such a requirement willfully. This priority is not required by law,
but is being imposed as a matter of discretion, in recognition of the Justice Department's priorities
and the fact that the Biden Administration created a particularly uncertain regulatory environment
around digital assets. 2
Prosecutors should not charge violations of the Securities Act of 1933, the Securities
Exchange Act of 1934, the Commodity Exchange Act, or the regulations promulgated pursuant to
these Acts, in cases where (a) the charge would require the Justice Department to litigate whether
a digital asset is a "security" or "commodity," and (b) there is an adequate alternative criminal
charge available, such as mail or wire fraud. The following types of positions are permissible
under this policy in connection with proposed prosecutions that would otherwise be consistent
with the guidance in this memorandum: (i) talcing the position that bitcoin or ether is a
"commodity" under the Commodity Exchange Act; and (ii) filing securities fraud charges where
the 'security" at issue is the equity or stock in a digital asset company. Any exceptions to this
policy must be approved by the Deputy Attorney General, or his designee(s). Relevant
considerations for such an exception include whether the digital asset is widely accepted to be a
"security" or "commodity," whether the parties to the litigation have an interest in defending the
position that a digital asset is a "security" or "commodity," and whether there is no alternative
criminal charge under Title 18.
III. Compensating Victims In The Digital Assets Space
Following the prolonged period ofprice decline in the digital asset market in 2022, multiple
companies with custody of investors' digital assets collapsed and entered bankruptcy, including
FTX, Voyager Digital, Celsius Network, Genesis Global, BlockFi, and Gemini Trust. In some
instances, investor losses have been directly attributable to fraud and theft. In those cases, and
others, prosecutors have been able to forfeit proceeds of criminal activity including digital assets
that in some instances became worth billions of dollars. However, as a result of regulations, some
digital asset investor victims have only been able to recover the value of their digital assets at the
time the fraud was perpetrated. See 28 C.F.R. § 9.8(c). The effect: digital asset investors ' losses
may be calculated at a value when the digital asset market was at a lower point, and victims who
bore the risk of loss are unable to benefit from corresponding gains that occurred during or after
the period in which they were victimized and would otherwise have possessed the asset.
Accordingly, the Office of Legal Policy and the Office of Legislative Affairs are directed to
evaluate and propose legislative and regulatory changes to address this concern and improve asset
forfeiture efforts in the digital assets space.
2 This guidance does not reflect a view by the Department that the criminal offense set forth in 18
U.S.C. § 1960 requires proof of willfulness in other contexts, and it casts no doubt on existing case
law. Moreover, 18 U.S.C. § 1960(b)(l)(C) requires that the transmission of funds "are known to
the defendant to have been derived from a criminal offense or are intended to be used to promote
or support unlawful activity," and is therefore outside the scope of this policy.
Memorandum from the Deputy Attorney General Page 4
Subject: Ending Regulation By Prosecution
IV. Shifting Resources Relating To Digital Assets
U.S . Attorneys ' Offices will use long-recognized criminal justice tools to lead appropriate
prosecutions consistent with the foregoing enforcement priorities and charging consideration.
Consistent with the narrowing of the enforcement policy relating to digital assets, the Market
Integrity and Major Frauds Unit shall cease cryptocurrency enforcement in order to focus on other
priorities, such as immigration and procurement frauds. The National Cryptocurrency
Enforcement Team (NCET) shall be disbanded effective immediately. The Criminal Division's
Computer Crime and Intellectual Property Section (CCIPS) will continue to provide guidance and
training to Department personnel and serve as liaisons to the digital asset industry.
V. The President's Working Group on Digital Asset Markets
The Justice Department will fully participate in President Trump 's Working Group on
Digital Asset Markets, which was established in Executive Order 14178, via attorneys designated
by the Justice Department's senior leadership. As directed by President Trump, the Department's
designees will identify and make recommendations regarding regulations, guidance documents,
orders, or other items that affect the digital asset sector. Additionally, the Department will
participate in the preparation of a report to President Trump recommending regulatory and
legislative proposals that advance the policies and priorities set forth in the President's Executive
Order. Following the submission of the report, the Justice Department will take all steps necessary
to implement the recommendations in the report that President Trump adopts.