Republican President-elect Donald Trump promised to ease cryptocurrency enforcement during his campaign. And that's what will happen as President Trump resets the policies of the Justice Department and regulators, current and former government lawyers said at a conference in New York on Friday.
Cryptocurrency fraud cases will not be given a free pass, but they will no longer be a priority. Lawyers said the focus of government agencies and departments is likely to shift to areas such as immigration enforcement, one of Trump's campaign promises.
Scott Hartman, co-chief of the U.S. Attorney's Securities and Commodities Division in Manhattan, said the office will reduce resources devoted to crypto-related crimes. This means there will be fewer prosecutors handling crypto cases than in 2022, when the crypto industry collapsed and caused a “crypto winter.”
Hartman said there are currently 16 prosecutors on the Securities and Commodities Task Force. “There aren't a lot of people around right now,” Hartman said. “I hope they don’t trim it any further,” he added.
“This is a big deal,” said Steve Pelkin, a partner at law firm Sullivan & Cromwell who led SEC enforcement under former President Trump from 2017 to 2021.
“Significant resources could be reallocated to immigration enforcement. I would be surprised if that didn't happen.”
Hartman and Pelkin's comments came a day after President Trump said he would nominate Jay Clutton, the former Securities and Exchange Commission chairman in the Trump administration, to be the new U.S. attorney in Manhattan. Under Mr. Clayton, the SEC pursued some crypto cases, but not as aggressively as under current chairman Gary Gensler.
Trump's campaign promise included firing Gensler. The SEC is an independent agency, meaning President Trump does not have the authority to fire Gensler. However, Gensler's term ends in July 2025. Trump has not yet proposed a new SEC chairman.
The SEC is currently involved in litigation with crypto companies like Coinbase and Binance. However, it is unclear whether the incident will continue if the leadership changes.
The public prosecutor's office is not the only one to readjust its priorities. The Commodity Futures Trading Commission (CFTC) is likely to follow suit. The agency first filed a virtual currency lawsuit in 2015. Since then, crypto-related cases have accounted for nearly half of the agency's cases, CFTC Enforcement Director Ian McGinley said at a briefing. He added:
“I don't know if that trend will necessarily continue…as long as there is fraud and manipulation in these markets, we will continue to be active.”
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