TL;DR
- The DOJ’s new guidance emphasizes targeting criminal activity that exploits digital assets — not the regulatory status of the technology itself.
- Investigations will now prioritize illicit activity that victimizes ecosystem participants or facilitates crime by organized syndicates, cartels, and terrorist organizations, while deprioritizing technical regulatory violations, unless there’s clear intentional enablement of crime.
- Chainalysis recognizes the DOJ’s world-class capabilities in tackling complex crimes with a crypto nexus. We are proud to support these efforts with the best-in-class data, tooling, and training to disrupt and proactively combat crime in the digital assets space.
- As we double down on proactive web3 security and on-chain threat prevention, Chainalysis is making the ecosystem more secure — giving our partners an edge to stop attacks before they escalate.
On April 7, 2025, Deputy Attorney General Todd Blanche issued a memorandum — colloquially referred to as the “Blanche Memo” — signaling a shift in the U.S. Department of Justice (DOJ)’s approach to digital asset enforcement. The memo directs the agency to end “regulation by prosecution” and instead target illicit activities that use digital assets to cause direct harm or to facilitate broader criminal conduct.
While this change has disbanded the National Cryptocurrency Enforcement Team (NCET) established in 2022, it does not signal a retreat from prosecuting crime linked to cryptocurrency. Instead, the DOJ is reiterating its focus on fraud, terrorism, drug trafficking, human trafficking, cybercrime, and organized crime where digital assets are used as a tool — while deprioritizing regulatory violations in the absence of clear, willful misconduct.
The DOJ’s objective is to provide clarity and align with the broader goals of Executive Order 14178, which speaks to the importance of supporting innovation for “a vibrant and inclusive digital economy” while also protecting citizens from the misuse of digital assets for illegal ends. Chainalysis supports this renewed focus, empowering law enforcement with actionable intelligence to proactively combat the misuse of digital assets.
How the DOJ’s digital asset enforcement is changing
While NCET brought targeted scrutiny to major digital asset cases, its closure is a move to focus more on crimes that are further enabled through the use of digital assets rather than the asset class itself. The disbandment of NCET and the redistribution of its expertise could enable the integration of digital asset-related expertise into broader criminal investigations.
As we called out last year in our Cryptocurrency and Money Laundering report, “….expertise in cryptocurrency must extend beyond specialized cybercrime units to include law enforcement agencies of all kinds.” This shift mirrors the growing footprint of cryptocurrency in every type of crime and the need for a unified, holistic approach to enforcement and the countering of illicit activity.
The DOJ hones in on its enforcement priorities
Moving forward, the DOJ will prioritize investigation and prosecutions involving the criminal misuse of digital assets in the following areas.
Fentanyl and countering drug trafficking
As the fentanyl epidemic worsens, cryptocurrency has become a widely-used tool across the entirety of the fentanyl ecosystem, from precursor manufacturers and drug forums to darknet markets and postage services.
How Chainalysis is helping: U.S. government agencies are using Chainalysis data to disrupt the cartel-fentanyl ecosystem, which revolves heavily around the Mexico-China corridor, building bespoke workflows that offer real-time alerts to facilitate quick disruption at key choke points.
Organized crime and cartel activity
Cryptocurrency is increasingly being used by transnational organized criminal syndicates and cartels for money laundering, asset transfer, and reinvestment in illicit activities.
How Chainalysis is helping: Chainalysis is playing a key role in unmasking and disrupting these operations. As detailed in our 2025 Crypto Crime report, in a recent DOJ case from the Eastern District of Wisconsin, authorities used Chainalysis tools to seize over $5.5 million in cryptocurrency from a Mexican cartel-linked money laundering network and to identify crypto wallets moving fentanyl and methamphetamine proceeds.
Terrorism financing
An array of terrorist organizations have used digital assets to raise and transfer funds. The DOJ is prioritizing efforts to track and dismantle these financing lifelines.
How Chainalysis is helping: Just a few weeks ago, with the help of Chainalysis data, the DOJ announced the disruption of a Hamas terrorist financing scheme, which involved the seizure of approximately $200,000 in crypto used to fund the group’s activities.
Human trafficking and smuggling
The rise of digital assets in human trafficking and smuggling operations is a growing challenge. The pseudonymity of cryptocurrency appeals to traffickers, but the transparency of blockchain is turning this against them.
How Chainalysis is helping: Investigators using Chainalysis tools can leverage blockchain analytics to map and disrupt these networks. Last November, with support from Chainalysis, Tether and OKX worked with the DOJ to freeze a record $225 million in USDT tied to a Southeast Asian human trafficking ring running romance scams.
Cybercrime and computer intrusions
Cybercriminals continue to use cryptocurrency for ransomware, hacks, and other types of cyberattacks.
How Chainalysis is helping: Chainalysis’ real-time tracing and visualizations help investigators identify perpetrators, freeze and seize stolen cryptocurrency, and recover funds. In 2023, a Las Vegas Company (widely reported as Caesars) paid about $15 million in bitcoin to cybercriminals in a ransomware attack. Using Chainalysis, the FBI traced the funds across wallets and multiple blockchains, freezing $11.8 million and later seizing cryptocurrency linked to the ransom. The DOJ’s forfeiture filing featured Chainalysis Reactor graphs mapping the illicit transfers.
How Chainalysis is powering proactive fraud prevention and consumer protection with Alterya and Hexagate
Consumer protection is another major focus, with the DOJ particularly concerned with cases where victims are defrauded through crypto investment schemes. This includes scams like Ponzi schemes, authorized push payment (APP) fraud, fake initial coin offerings (ICOs), rug pulls, and other activities that lead to deception and financial harm of crypto investors and consumers.
How Chainalysis is helping: With our acquisition of Alterya and Hexagate, Chainalysis has significantly expanded our capabilities to proactively prevent crime and protect the digital assets ecosystem at scale.
Alterya delivers real-time fraud detection powered by AI, helping exchanges and financial institutions stop scammers before they reach victims — reducing fraud by up to 60% and protecting over 100 million users. Hexagate brings state-of-the-art web3 threat prevention, safeguarding protocols, asset managers, and exchanges from exploits, hacks, and rug pulls, with more than $1 billion in customer funds already protected.
These acquisitions allow Chainalysis to expand from investigating crime to stopping it in its tracks — securing users, projects, and the broader financial ecosystem before damage is done.
The DOJ shifts away from regulatory enforcement
According to the new guidance, when prosecuting digital assets-related regulatory violations, the DOJ has emphasized that traditional criminal charges be used when available, such as wire fraud, mail fraud, and money laundering laws. This approach avoids the need to litigate whether a cryptocurrency is a security or commodity — which is often fraught with complexity and ambiguity.
The DOJ has decided to deprioritize regulatory violations, unless there is clear and willful misconduct involved. These violations can involve the following laws and legislation:
- The Bank Secrecy Act (BSA): Typically associated with anti-money laundering (AML) violations, the BSA requires financial institutions to maintain records and file reports related to financial transactions. The DOJ has instructed prosecutors not to charge BSA violations unless there was a willful intent to violate the law.
- Securities laws: The DOJ will avoid prosecuting cases focused solely on determining whether a digital asset qualifies as a security under the Securities Act.
- Commodities laws: Similar to securities laws, the DOJ will not prioritize litigation around whether a digital asset is a commodity under the Commodity Exchange Act.
- Unlicensed money transmission: Violations of money transmissions laws, such as operating without a license, will not be pursued unless there is evidence of willful intent to violate the law.
The DOJ’s stated intent with this new policy is to ensure that legitimate innovation in the cryptocurrency ecosystem is not stifled, while continuing to take firm action against those who use it for harm.
This work aligns well with the DOJ’s capabilities in fighting complex crimes with a crypto nexus. U.S. law enforcement is among the best in the world at this work, and Chainalysis is proud of the part we’ve played in assisting them. Chainalysis fully supports the DOJ in its investigations and prosecutions that target the illicit use of cryptocurrency by criminal syndicates, cartels, terrorist groups, and human traffickers.
What this means for Chainalysis and the digital assets industry at large
With the rapid, global adoption of cryptocurrency, a growing share of economic activity is moving on-chain. As cryptocurrency becomes a core part of the financial system, it is increasingly entwined with all forms of crime — making digital assets literacy essential for all investigations.
However, cryptocurrency is not inherently illicit any more than fiat currency. We estimate out of the tens of billions of dollars transacted on the blockchain each year, only about 0.14% is illicit. But as with any powerful technology, criminals will abuse it for their own purposes. What matters is the underlying crime itself, more than the medium through which it occurs.
Chainalysis is committed to supporting the strategic priorities of the DOJ. With deep expertise in high-priority threats like the fentanyl trade, cartel activity, and human trafficking, our team equips law enforcement with the tools and intelligence they need for mission success — powered by our best in class product suite and investigators.
Why this matters (and what doesn’t change)
This new policy suggests that digital assets platforms and services will only face prosecution if they knowingly commit or enable crime. This provides clarity for the industry while ensuring that criminal conduct is targeted effectively.
Compliance remains paramount for the digital assets industry
Importantly, strong compliance with robust AML/KYC remains more essential than ever — especially for digital asset service providers and decentralized platforms. The DOJ’s commitment to prosecuting criminal activity remains unchanged and defendants who wittingly engage in or facilitate criminal conduct will still be pursued. This aligns with Chainalysis’ mission to disrupt crime and protect the integrity of the digital assets ecosystem by providing actionable intelligence that helps law enforcement track, disrupt, and prosecute illicit financial activity conducted through cryptocurrency.
Victim protection and recovery is a foremost priority
The DOJ is also actively exploring ways to improve victim compensation in digital assets cases. This may include enhancing asset forfeiture tools to better support the recovery of assets in-kind lost through fraud or other criminal activities. As cryptocurrency continues to grow as a medium of exchange, the DOJ recognizes the need for updated approaches to ensure victims are adequately compensated. This is particularly important given the volatility of cryptocurrency, where the value of stolen assets may fluctuate significantly over time. By allowing for a more equitable recovery, the DOJ aims to better compensate victims for their losses and ensure that the recovery process reflects the actual harm suffered.
Chainalysis plays an active role in the digital asset seizure and recovery process, providing law enforcement with the technology and expert support needed to track, freeze, and disrupt illicit financial networks. To date, Chainalysis has assisted our partners in the seizing and freezing of at least $12.6 billion in cryptocurrency.
Additionally, Chainalysis’ Wallet Scan has helped law enforcement recover funds from scams and fraud by automating the conversion of seed phrases into public keys while preserving evidential integrity, allowing investigators to act before assets are moved.
Working together to create a safer digital assets ecosystem
Chainalysis is proud to support the DOJ and our global law enforcement partners in their mission to hold bad actors accountable, protecting the integrity of the digital assets ecosystem.
As a trusted provider of actionable intelligence, advanced technology, and expert training, Chainalysis continues to play a major role in equipping our global partners to trace illicit flows, dismantle criminal networks, and also seize and freeze digital assets linked to criminal activity. These efforts not only disrupt bad actors — they enable meaningful recovery of stolen funds, deliver justice to victims, and strengthen the foundation for future enforcement. Together, we’re working with our partners in the private and public sector — such as the DOJ — to ensure the digital asset space remains a safe, secure space for legitimate users across the world.
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