Six U.S. Senators have formally accused Deputy Attorney General Todd W. Blanche of a significant conflict of interest, alleging he held substantial cryptocurrency investments while directing the Department of Justice (DOJ) to scale back its enforcement efforts against the digital asset sector. In a letter dated January 29, 2026, the lawmakers demand a detailed investigation and answers by February 11.
The core allegation centers on Blanche's personal crypto holdings, reported to be worth between $158,000 and $470,000 and primarily consisting of Bitcoin (BTC) and Ethereum (ETH). The Senators claim these holdings created a direct financial interest when Blanche issued a pivotal memo in April 2025 titled "Ending Regulation by Prosecution." This directive instructed federal prosecutors to avoid targeting cryptocurrency exchanges, mixers, and other platforms for user actions, and instead focus on individuals committing crimes with crypto. It also led to the disbanding of the DOJ's specialized National Cryptocurrency Enforcement Team (NCET).
The letter, signed by Senators Elizabeth Warren, Mazie K. Hirono, Richard J. Durbin, Sheldon Whitehouse, Christopher A. Coons, and Richard Blumenthal, states: "At the very least, you had a glaring conflict of interest and should have recused yourself." They argue that Blanche's participation "appears to have violated 18 U.S.C. § 208(a)," a federal law prohibiting executive branch employees from participating in matters where they have a known financial interest, with willful violations punishable by up to five years in prison.
A detailed timeline in the letter alleges that Blanche sold or transferred his crypto holdings between May and June 2025—months after he agreed to divest them in February and after issuing the controversial memorandum in April. The Senators warn that the policy shift has already facilitated an increase in crypto-related crimes, including sanctions evasion, drug trafficking, scams, and activity linked to Chinese money laundering networks, as they had predicted.
In response to the allegations, the DOJ published a statement last week, asserting the issue "was appropriately flagged, addressed, and cleared in advance" and calling the claims "nothing more than another baseless character assassination." The Senators' letter counters by requesting a full explanation of how the matter was handled, specific actions taken, and records of communications with ethics officials.
The controversy has broader implications. Ethics watchdog Campaign Legal Center (CLC) has filed a complaint with the DOJ inspector general, calling for an independent investigation. Experts note that the case highlights the unique challenges cryptocurrencies pose to government ethics frameworks due to their volatility and direct link to regulatory news. The outcome could set a precedent for disclosure and recusal protocols for officials involved in fintech regulation and impact the legitimacy and pace of future crypto enforcement policies.
