A four-page memo signed by Deputy Attorney General Todd Branch directs the U.S. Department of Justice (DOJ) to exercise more discretion in prosecuting cryptocurrency cases and halt any cases that “impose a regulatory framework on digital assets” until regulators develop a new framework for the industry.
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It was a memo that was praised by the cryptocurrency industry, although it raised concerns that the Justice Department might take a lax approach to fraud or other criminal activity. Lawyers said in April that following the release of the memo, they did not expect the Justice Department to actually take a lenient approach to apparent fraud, but would instead wait for clarification from the SEC or Commodity Futures Trading Commission to more clearly define how different crypto-assets fall under the definition of securities or commodities.
On a practical level, it’s difficult to measure what impact the memo actually had. Without the memo, it’s impossible to know how many cases the Justice Department might have brought, and in ongoing cases prosecutors have mostly said the memo doesn’t apply.
The memo was cited by defense attorneys representing Keonne Rodriguez and William Lonergan Hill, who ultimately pleaded guilty to conspiracy charges and were sentenced to five and four years in federal prison, respectively, in asking a judge to dismiss the lawsuit against the developers of Samourai Wallet. Prosecutors who charged Terra/Luna creator Do Kwon, who later pleaded guilty to conspiracy and wire fraud charges and was sentenced to 15 years in prison last week, said the memo did not apply to their case.
In the one case in which prosecutors acknowledged amending a case because of the memo, against Tornado Cash developer Roman Storm, the Justice Department dropped only part of one charge; Storm remains guilty of conspiracy to operate an unlicensed money transfer business and will be sentenced in the coming months.
Still, Branch’s memo marks a shift in how the Justice Department handles encryption cases and reflects broader changes within the federal government under current President Donald Trump, which has become more crypto-friendly than the administration of former President Joe Biden.
