Republican President-elect Donald Trump promised during his campaign to relax crypto enforcement. And that’s what will happen if Trump resets policies at the Justice Department and regulatory agencies, current and former government lawyers said Friday at a conference in New York.
Crypto fraud cases are not given a free pass, but would also no longer be a priority. The lawyers said the focus of government agencies and departments will likely shift to areas such as immigration enforcement — another of Trump’s campaign promises.
Scott Hartman, co-chief of the U.S. attorney’s office’s securities and commodities task force in Manhattan, said the office will devote fewer resources to crypto-related crimes. This means there will be fewer prosecutors working on crypto cases than in 2022, when the crypto industry collapsed and triggered a “crypto winter.”
Hartman said the securities and commodities task force currently has 16 prosecutors. “I don’t have a lot of people right now,” Hartman said. “I hope they don’t prune it any more,” he added.
Partner at law firm Sullivan & Cromwell, Steve Pelkin, who led SEC enforcement during Trump’s previous presidency between 2017 and 2021, said:
“There could be a reallocation of substantial immigration enforcement resources. I would be surprised if that doesn’t happen.”
Hartman and Pelkin’s comments come a day after Trump said he would nominate Jay Claton, who served as chairman of the U.S. Securities and Exchange Commission (SEC) under the previous Trump administration, as the new U.S. attorney in Manhattan. Under Clayton, the SEC had investigated some crypto cases, but the agency was less aggressive than under the leadership of current chairman Gary Gensler.
Trump’s campaign promises include firing Gensler. The SEC is an independent agency, meaning Trump does not have the authority to fire Gensler. However, Gensler’s term ends in July 2025. Trump has yet to nominate a new SEC chairman.
The SEC is currently embroiled in lawsuits with crypto companies like Coinbase and Binance. However, it is uncertain whether things would continue if there were a change in leadership.
It is not only the Public Prosecution Service that will rearrange priorities. The Commodity Futures Trading Commission (CFTC) will likely follow suit. The agency brought forward its first crypto case in 2015. Since then, crypto-related cases have come to account for almost half of the docket, Ian McGinley, CFTC enforcement director, said at the conference. He added:
“I don’t know if that trend will necessarily continue… To the extent that there is fraud and manipulation in those markets, we will continue to operate.”