Trump Administration Disbands Cryptocurrencey Fraud Unit - A Risky Step Backward for Consumer Protection

The recent announcement by the U.S. Department of Justice (DOJ), under President Trump, that the National Cryptocurrency Enforcement Team (NCET) is to be disbanded marks a significant shift in the regulatory landscape surrounding digital assets.  The NCET was originally established to combat the rising tide of cryptocurrency-related fraud and financial crime, the unit’s dissolution sends a clear message that enforcement against cryptocurrency fraudsters is no longer a priority in the government of the United States.

President Trump’s removal of this agency reverses the previous policy of oversight of the crypto industry and is part of a broader deregulatory approach adopted by the Trump administration which is designed to foster new innovation by reducing the perceived time consuming regulatory burdens imposed on digital asset platforms. However, while it is reasonable to suggest that the crypto industry undoubtedly benefits from a healthy degree of freedom, abandoning such a significant enforcement mechanism against fraud risks inviting a resurgence of criminal activity.  This action leaves victims of cryptocurrency fraud with fewer protections than ever.

A Blow to Accountability

The NCET performed a fundamental role in investigating and prosecuting cryptocurrency fraudsters that exploited the anonymity that the crypto industry provides, together with the speed and immutability of the blockchain technology which allows them to defraud retail investors, launder proceeds of crime and evade any sanctions.  Removing the capacity of the NCET to seek out fraudsters and enable the justice system to penalise offenders weakens the ability to address the constantly changing tactics of the crypto fraudsters.    

This is particularly concerning given the dramatic increase in crypto-related scams over recent years, many of which are sophisticated, international in scope and deliberately engineered to fall through regulatory cracks.

In parallel, the Securities and Exchange Commission (SEC) has also scaled back its specialist crypto enforcement division and prosecutors in the Southern District of New York—once amongst the most active agency in tackling crypto fraud—have announced they will redirect resources elsewhere. Collectively, these developments could embolden fraudsters, particularly those targeting cross-border victims or using decentralised platforms with minimal oversight.

Implications for both the Victims of Fraud and Financial Institutions

For victims of cryptocurrency fraud—many of whom are individuals or small businesses who have lost life-changing sums of money—the rollback in enforcement poses serious challenges. Without robust state intervention, the burden of asset recovery falls almost entirely on private litigation. This makes experienced legal representatives more vital than ever.

At Giambrone & Partners, our Financial Fraud Litigation team is highly experienced in combating the complexities of cryptocurrency disputes. We act swiftly to trace and freeze assets, pursue civil claims against fraudsters and negligent third parties.  Our lawyers have the capacity engage with foreign jurisdictions where necessary. We understand the evolving tactics used by fraudsters and leverage cutting-edge investigative and legal tools to recover misappropriated funds.

The firm does not back away from holding financial institutions—both traditional banks and digital exchanges—accountable when they fail in their duties to prevent the flow of criminal funds or are subject legal orders that they fail to implement properly.

“The disbandment of the DOJ’s crypto enforcement team is disappointing,” says Joanna Bailey, Partner at Giambrone & Partners and an expert in cryptocurrency fraud litigation. “It creates a vacuum in state-level accountability and underscores the increasing importance of private legal action. Victims cannot wait for Regulators to act—they need lawyers who understand both the technology and the law and who can respond quickly and effectively.”

Protecting Yourself and Pursuing Justice

In this new regulatory environment, vigilance is key. Crypto investors should take extra precautions, including verifying counterparties, avoiding unsolicited investment schemes and ensuring digital wallets and exchange accounts are secured with multifactor authentication.

Where fraud has occurred, early legal intervention can make a critical difference. Freezing orders, disclosure applications, and proprietary claims can prevent further dissipation of assets and increase the likelihood of recovery.

How Giambrone & Partners Can Help

Giambrone & Partners has a dedicated team of lawyers with extensive experience in financial services disputes, cryptocurrency fraud, and cross-border asset recovery. We assist clients with:

• Investigating and tracing cryptocurrency transactions across blockchain networks.
• Obtaining urgent freezing injunctions, including worldwide and proprietary orders.
• Litigating against fraudsters, crypto exchanges, and negligent financial institutions.
• Coordinating with foreign legal systems and crypto asset recovery experts.

In an increasingly deregulated landscape, we remain committed to protecting the interests of those affected by financial crime and bringing wrongdoers to justice.

Joanna frequently leads the litigation against financial institutions involved in cryptocurrency trading disputes, as well as Forex investment issues and regulatory investigations and has some considerable success in retrieving our clients' funds lost in fraud.

She has developed a range of strategies both to find the assets of the individuals perpetrating the fraudulent schemes and restore the funds to our clients. As well as recognising culpability in the organisations facilitating (but not associated with the fraud), by failing to undertake adequate due diligence.

Joanna led the first case in Europe where proceedings were served on Persons Unknown connected with two digital wallets over the blockchain by non-fungible token or ‘NFT’ in a cryptocurrency fraud. Following this ground-breaking case Joanna was named as Lawyer of the Week in the Financial Times.

Joanna is highly experienced in high-value out-of-court settlement negotiations and has in-depth knowledge of the Civil Procedure Rules as well as English common law and is a highly regarded for her meticulous approach and her persistence when investigating international fraud matters. Her considerable experience and dogged pursuit frequently leads to the successful recovery of funds for clients.

If you or your business has been affected by cryptocurrency fraud, contact our team at Giambrone & Partners today for a confidential consultation.  Please email clientservices@giambronelaw.com