Six Democratic U.S. Senators have formally accused Deputy Attorney General Todd Blanche of a "glaring conflict of interest" related to his personal cryptocurrency holdings and his decision to disband a key Justice Department enforcement unit. The controversy stems from a ProPublica report revealing Blanche held between $158,000 and $470,000 in Bitcoin (BTC), Ethereum (ETH), and Solana (SOL) when he issued a memo in April 2025 titled "Ending Regulation by Prosecution."
This memo disbanded the National Cryptocurrency Enforcement Team (NCET), halted Biden-era investigations into crypto companies, and directed the DOJ to assist former President Trump's crypto working group. The NCET, established in 2022, was responsible for leading the investigation into Binance that resulted in a $4.3 billion settlement. Following the memo, the DOJ's Market Integrity and Major Frauds Unit was directed to cease cryptocurrency enforcement to focus on other priorities, limiting future DOJ crypto cases to those involving terrorism, narcotics, human trafficking, hacking, and cartel financing.
Blanche had signed an ethics agreement in February 2025, promising to divest his digital assets within 90 days and not participate in matters affecting those interests. However, he issued the enforcement rollback memo before completing the divestiture. During that window, his Bitcoin holdings alone appreciated by 34 percent, representing an approximate gain of $105,000. When he eventually divested, he transferred the holdings to his adult children and a grandchild rather than liquidating them, a move ethics experts called technically legal but against the spirit of conflict-of-interest laws.
Senators Elizabeth Warren, Mazie Hirono, Dick Durbin, Sheldon Whitehouse, Chris Coons, and Richard Blumenthal have set a February 11 deadline for Blanche to produce all communications with ethics officials and the crypto industry from around the time of the memo. Simultaneously, the Campaign Legal Center filed a complaint with the DOJ Inspector General, arguing the asset transfers did not eliminate his potential financial interest.
The senators cited a January 2026 Chainalysis report showing illicit crypto activity surged 162 percent in the prior year, arguing the consequences of the enforcement rollback they predicted had proven correct. A DOJ spokesperson told ProPublica the actions were "appropriately flagged, addressed and cleared in advance," without specifying who cleared them or how.
Separately, the crypto regulatory standoff intensified as Coinbase formally withdrew its support for the latest draft of the CLARITY Act. The exchange told Senate Banking Committee offices it has significant concerns about the Tillis-Alsobrooks compromise draft, which bans passive yield on stablecoin balances and restricts access to transaction size data used to calculate rewards. This attacks the core infrastructure Coinbase uses to generate stablecoin revenue.
Coinbase reported $1.35 billion in stablecoin revenue in 2025, largely tied to its USDC distribution agreement with Circle. Provisions eliminating stablecoin yield could strip the exchange of an estimated $800 million in annual revenue. CEO Brian Armstrong first pulled support in January, stating "we’d rather have no bill than a bad bill." This second formal withdrawal followed a revised draft that tightened yield language further. Coinbase's leverage is significant, as its withheld endorsement signals a fracture in industry consensus, complicating the bipartisan vote count needed for the bill, which faces a critical May deadline before midterm season risks derailing it entirely.
