An ethics watchdog group has initiated a complaint seeking an investigation into Todd Blanche, currently serving as the Deputy Attorney General at the Justice Department and previously President Donald Trump’s criminal defense attorney. The focus of the complaint is on Blanche’s potential breach of federal conflict-of-interest laws related to his involvement in a recent prosecution policy that appears to favor the cryptocurrency sector.
This complaint follows a ProPublica investigation that disclosed Blanche’s ownership of crypto-related assets valued at over $159,000 when he issued a memo ordering the cessation of investigations into cryptocurrency companies, dealers, and exchanges that had been initiated during President Joe Biden’s administration. In the April memo, Blanche also disbanded a specialized enforcement team tasked with identifying crypto-related fraud and money laundering.
Notably, Blanche had previously signed an ethics agreement committing to divest himself of cryptocurrency holdings within 90 days of his confirmation. This agreement also stipulated that he would refrain from participating in matters that could have a “direct and predictable effect” on his financial interests in virtual currencies until his investments were sold. However, evidence shows that he divested from these holdings only after issuing the memo, transferring them to his adult children and a grandchild, a move that, while technically legal, raises ethical concerns regarding compliance with the spirit of the law.
The Campaign Legal Center, the organization behind the complaint, has requested that the Justice Department’s acting inspector general investigate these allegations. The organization contends that Blanche’s actions may have improperly influenced DOJ policies in a way that benefitted his financial interests, with the memo potentially increasing the value of his cryptocurrencies.
Kedric Payne, the general counsel and senior director of ethics at the Campaign Legal Center, emphasized that it is imperative for the public to have assurance that decisions made within the government are conducted for the public good, not for personal financial gain. The organization has urged the inspector general to explore whether a criminal violation took place.
Under federal conflict-of-interest laws, government officials are prohibited from participating in matters that may financially benefit them or their immediate family without obtaining specific waivers from the government. Violations of this statute can result in penalties ranging from civil fines to criminal charges, including imprisonment.
The complaint alleges that Blanche’s memos benefited the broader cryptocurrency industry, thereby implicating his own investments. It was noted that Blanche’s Bitcoin holdings, for instance, appreciated by approximately 34% from the time he issued the memo until he divested. Throughout this period, he also held investments in other cryptocurrencies like Solana and Ethereum, as well as stock holdings in Coinbase.
Payne pointed out the unusual nature of the case, stating he had not encountered a situation where a government official signed an ethics agreement and subsequently took actions that contradicted the agreement while leaving clear evidence of the conflict.
The Department of Justice has yet to respond to inquiries regarding the complaint.
Todd Blanche, who previously served as a federal prosecutor for the Southern District of New York, has been a central figure in various legal proceedings involving Trump, including a high-profile conviction related to a hush-money payment and allegations concerning the 2020 election.
In his April memo, titled “Ending Regulation by Prosecution,” Blanche criticized the Biden administration’s hardline approach to cryptocurrency regulation and expressed a preference for a strategy that would only target illicit uses of crypto by criminals, rather than prosecuting the platforms facilitating these transactions. This shift in policy was met with positive responses from the cryptocurrency market, resulting in a spike in trading activity.
In a subsequent ethics filing, Blanche stated that he had completely gifted his cryptocurrency assets to family members and sold some additional investments. The timing of these transactions, which occurred in late May and early June, has further fueled the controversy surrounding his actions and their implications for ethical governance within the Justice Department.
