Kostelanetz partners Sharon McCarthy and Victor Suthammanont co-wrote an article for Bloomberg Law titled “DOJ’s New Crypto Crime Guidance Muddies the Prosecutorial Waters.”
In the article, Sharon and Victor detail concerns about the Department of Justice’s (DOJ) April 2025 memo regarding cryptocurrency and digital asset enforcement, which sets objectives that seem to be at odds with each other.
Per the memo issued by Deputy Attorney General Todd Blanche, the DOJ will no longer target digital “exchanges, mixing and tumbling services, and offline wallets for the acts of their end users or unwitting violations of regulations—except to the extent that the investigation is consistent with the priorities” laid out in the memo. The memo asserts the changes are needed because the DOJ is “not a digital assets regulator” and will instead leave that work to “actual regulators.”
The memo states that prosecutors shouldn’t charge cases involving regulatory violations related to “digital assets, such as unlicensed money transmitting, Bank Secrecy Act violations, unregistered securities offerings or broker-dealer activity, and Commodities Act registration violations, unless the defendant knew of the regulatory requirement and violated it willfully.”
However, as Sharon and Victor point out, the memo also directs the DOJ to focus on digital asset-related cases involving conduct that victimizes investors, such as “embezzlement and misappropriation of customers’ funds on digital-asset exchanges, common offering frauds, hacking, and exploiting vulnerabilities in smart contracts.” Cases in which digital assets are used by criminal outfits, such as cartels, international criminal organizations, and terrorist groups, are also to be prioritized.
The duo argue that the memo’s stated priorities may create confusion for cryptocurrency and digital asset firms. For example, they note that “Even while stating that prosecutors shouldn’t charge firms for the acts of their end users or for ‘unwitting’ violations, it exempts from this directive various frauds victimizing investors and the use of digital assets to facilitate organized crime, terrorism, and cartels.”
Outside of some implied leniency, the new approach to how DOJ handles digital asset matters thus provides mixed guidance for firms and their counsel on the compliance and defense measures they should take.
Read the complete article here.
About Sharon
Sharon is a Fellow of the American College of Trial Lawyers, has extensive experience representing individuals and corporations in white-collar criminal matters, civil and criminal tax controversies, and complex commercial litigation. She has experience in a wide range of matters involving allegations of securities fraud, insider trading, and alleged market manipulation; bank fraud; tax fraud; mail and wire fraud, including theft of honest services; accounting fraud; criminal antitrust violations; public corruption; and attorney misconduct, among others.
About Victor
Victor served for a decade as an enforcement attorney at the U.S. Securities and Exchange Commission, including as a Senior Trial Counsel and as the Enforcement Counsel to Chair Gary Gensler. Prior to his extensive experience in the SEC’s Division of Enforcement, Victor represented and advised clients in private practice in complex commercial disputes and litigations, as well as in internal and governmental investigations.
