Does Todd blanche crypto conflict of interest breach law?

• Campaign Legal Center asked the DOJ acting inspector general to investigate Todd Blanche after his April 7 memo curbing crypto cases and disbanding the NCET.
• ProPublica said Blanche held at least $159,000 in crypto when he issued the memo, and his bitcoin was later estimated at $105,881.53 after a 34% rise.
• Blanche had agreed to divest within 90 days; filings show late May to early June transfers to adult children and a grandchild, while DOJ said it was cleared.

A new ethics complaint has put the todd blanche crypto conflict of interest question in the spotlight, asking whether a senior Justice Department official violated federal law after changing how prosecutors handle digital-asset cases. The filing, submitted Thursday by an ethics watchdog group, seeks an investigation into actions taken by Deputy Attorney General Todd Blanche, President Donald Trump’s former criminal defense lawyer and now the department’s second-in-command.

The request follows a ProPublica report last month that said Blanche held at least $159,000 in crypto-related assets when he issued a memo curbing certain crypto investigations. The complaint argues that the policy shift benefited the cryptocurrency industry, including assets Blanche still held at the time.

Complaint seeks investigation into Todd blanche crypto conflict of interest

The Campaign Legal Center asked the Justice Department’s acting inspector general to review whether Blanche broke the federal conflicts-of-interest statute. In its filing, the group contended that evidence indicates Blanche “blatantly and improperly influenced DOJ’s digital asset prosecution guidelines while standing to financially benefit.” Kedric Payne, the organization’s general counsel and senior director of ethics, wrote that the public should be assured government decisions are not shaped by an official’s financial holdings, and urged the inspector general’s office to determine whether a criminal violation occurred.

The Campaign Legal Center described itself as a nonpartisan watchdog focused on challenges facing U.S. democracy. Its trustees and staff include Democrats and Republicans, and it noted that Trevor Potter, a Republican and former chair of the Federal Election Commission, serves as president of its Board of Trustees.

Payne said the group’s request was triggered by what he called “strong evidence” of wrongdoing. He also said he had not seen another example in which an official signed an ethics agreement and then took a verifiable step that did not align with it.

The April memo, crypto holdings, and ethics commitments

The dispute centers on an April 7 memo Blanche issued titled “Ending Regulation by Prosecution.” In it, Blanche criticized the Biden-era Justice Department approach to crypto, calling it “a reckless strategy of regulation by prosecution, which was ill conceived and poorly executed.” The memo ended certain investigations into crypto companies, dealers, and exchanges that had been launched during President Joe Biden’s term, according to the complaint’s description of the actions.

The memo also eliminated the National Cryptocurrency Enforcement Team, a unit created to pursue crypto-related fraud and money-laundering cases and which had secured several notable convictions. Blanche wrote that the department would instead focus on terrorists and drug traffickers who used crypto illegally, rather than targeting the platforms that hosted such activity. The memo argued that the digital-asset sector matters for economic development and innovation, and cited President Trump’s position that the administration would end what it called regulatory “weaponization” against digital assets.

According to the source material, the market responded positively and crypto trading increased after the policy shift.

The complaint points to Blanche’s personal finances as a central issue. ProPublica reported that Blanche owned at least $159,000 in crypto-related assets when he issued the April memo. Payne said Blanche’s bitcoin value rose by 34% between the memo and Blanche’s divestment, reaching $105,881.53. At the time the memo went out, Payne said Blanche also held other crypto investments, including Solana and Ethereum, as well as stock in Coinbase.

Blanche had earlier signed an ethics agreement committing to sell his cryptocurrency within 90 days of confirmation. The agreement also said he would not participate in matters that could have a “direct and predictable effect on my financial interests in the virtual currency” until he had sold his bitcoin and other crypto-related products.

Later ethics paperwork showed Blanche sold or otherwise disposed of the holdings more than a month after the April memo, according to the source. Those filings also indicated that when Blanche ultimately removed the crypto from his holdings, he did so partly by transferring the assets to adult children and a grandchild. Ethics experts cited in the source said that approach is technically permitted but conflicts with the purpose and spirit of the rules.

An ethics filing Blanche electronically signed in June stated that his bitcoin and other crypto holdings—listed as including Solana, Cardano, and Ethereum—“were gifted in their entirety to my grandchild and adult children.” Financial disclosure forms provide value ranges rather than exact figures. Blanche reported that the transfers to family members were worth between $116,000 and $315,000 at the time of the filing. He also reported selling additional crypto-related investments worth between $5,000 and $75,000. The filing said the divestment occurred in late May and early June.

Legal standards, potential penalties, and DOJ response

Federal conflict-of-interest law bars government officials from taking part in a “particular matter” that could financially benefit the official or immediate family members unless a waiver is granted. The penalties described in the source range from up to one year in jail or a civil fine of up to $50,000, to as much as five years in prison for willful violations.

In its complaint, Payne argued Blanche’s actions ran afoul of those rules because the policy change benefited the crypto industry broadly, including Blanche’s own investments. The Campaign Legal Center asked the acting inspector general to investigate.

The Justice Department disputed the premise of the complaint. In a statement sent to ProPublica on Friday, a department spokesperson said Blanche “upholds the highest levels of transparency and ethical standards.” The spokesperson added that the matter was “appropriately flagged, addressed, and cleared in advance,” and called the allegations a “baseless character assassination” that diverts resources from the department’s work combating crime, fraud, and drug trafficking.

Conclusion

The complaint leaves the todd blanche crypto conflict of interest allegations with the Justice Department’s acting inspector general, as the Campaign Legal Center presses for a formal review of Blanche’s April policy memo and the timing of his crypto divestment. At issue is whether Blanche’s earlier ethics pledge, his financial holdings, and the department’s shift away from certain crypto prosecutions created a conflict barred by federal law, or whether the department’s internal review already resolved the concerns.

Disclaimer

The information provided in this article is for informational purposes only and should not be considered financial advice. The article does not offer sufficient information to make investment decisions, nor does it constitute an offer, recommendation, or solicitation to buy or sell any financial instrument. The content is opinion of the author and does not reflect any view or suggestion or any kind of advise from CryptoNewsBytes.com. The author declares he does not hold any of the above mentioned tokens or received any incentive from any company.

Featured image created by AI