An ethics watchdog group filed a complaint Thursday seeking an investigation into whether President Donald Trump’s criminal defense attorney, now No. 2 at the Justice Department, violated federal conflict of interest laws when he announced new prosecution policies that benefited the cryptocurrency industry.
The charges come after a ProPublica investigation revealed that Todd Blanche owned at least $159,000 worth of crypto-related assets last month when he ordered an end to investigations into crypto companies, dealers and exchanges launched during President Joe Biden’s term in office. The order, issued by Deputy Attorney General Blanche in an April memo, also eliminates enforcement teams dedicated to investigating crypto-related fraud and money laundering schemes.
Blanche had previously signed an ethics agreement in which she promised to dispose of her cryptocurrencies within 90 days of her identity verification and not to become involved in any matter that could have a “direct and foreseeable impact on my financial interests in cryptocurrencies” until the Bitcoin or other crypto-related products were sold.
A subsequent ethics filing found that Blanche withdrew from the investment more than a month after issuing the memo. Even if he ultimately disposed of his cryptocurrency interests, ethics records show he transferred them to his adult children and grandchildren, an action that ethics experts say, while technically legal, violates the spirit and intent of the law.
In its complaint this week, the Election Legal Center asked the Justice Department’s acting inspector general to open an investigation. The complaint alleges that evidence suggests that Blanche “blatantly and unduly influenced the Department of Justice’s Digital Asset Prosecution Guidelines while in a position of financial advantage.”
“The public has a right to know that decisions are made in the public’s best interest and not to benefit the financial interests of public officials,” Kedrick Payne, the group’s general counsel and senior director of ethics, said in the complaint. The Office of Inspector General “needs to investigate and determine whether a criminal violation occurred.”
The Campaign Legal Center is a nonpartisan government watchdog group dedicated to addressing the challenges facing American democracy, and its board members and staff include Democrats and Republicans, including Trevor Potter, the Republican former chairman of the Federal Election Commission.
Under federal conflict of interest laws, government employees are prohibited from participating in “certain matters” that could provide financial benefit to them or their immediate family members, unless they receive a special exemption from the government. Penalties range from up to one year in prison or civil fines of up to $50,000 to up to five years in prison for willfully violating the law.
Mr. Payne argued in his complaint that Mr. Blanche’s orders violated the law because they benefited the entire industry, including his own investments. He estimated that between issuing the note and selling, Blanche’s Bitcoin alone rose 34% to $105,881.53. At the time of issuing this memo, Blanche was also invested in several other cryptocurrencies, including Solana and Ethereum, and also held shares in Coinbase.
Payne said “strong evidence” of wrongdoing prompted his group’s call for an investigation.
“I can’t think of any other situation where someone would sign an ethics agreement and then act outside of that agreement and have clear proof that they did so,” said Payne, who previously served as deputy assistant attorney general for the Office of Congressional Ethics and the U.S. Department of Energy.
The Justice Department did not respond to requests for comment.
Mr. Blanche, a former federal prosecutor in the Southern District of New York, served as Mr. Trump’s lead attorney in the Manhattan trial in which he was convicted of 34 felonies stemming from hush money payments to porn actress Stormy Daniels. Blanche also defended Trump against criminal charges accusing him of conspiring to destroy the 2020 election and possessing classified documents. (These two lawsuits were dropped after Trump was reelected as president.)
Since being confirmed by the Senate on March 5, Blanche has been making headlines in other ways, leading a restructuring of the Justice Department. Last year, as news of President Trump’s relationship with disgraced financier Jeffrey Epstein gained momentum, Mr. Branch privately interviewed Mr. Epstein’s longtime confidante, Ghislaine Maxwell, who is currently serving a 20-year sentence for aiding and abetting the sexual abuse of underage girls.
In an April 7 memo titled “Ending Prosecutorial Regulation,” Blanche blasted the Biden Justice Department’s hardline approach to cryptocurrencies as “a reckless strategy of prosecutorial regulation that was poorly conceived and poorly executed.” The memo disbanded the agency’s National Cryptocurrency Enforcement Team, which had won several high-profile convictions related to cryptocurrencies. Blanche said the agency would instead only target terrorists and drug traffickers who used cryptocurrencies illegally, and not the platforms that host them.
“The digital asset industry is critical to the country’s economic development and innovation,” Blanche wrote. “President Trump has also made the following statement.”[w]We will end the regulatory weaponization of digital assets. ”
The market responded favorably. Virtual currency trading has increased rapidly.
In an ethics application he electronically signed in June, Blanche said his investments in Bitcoin and other cryptocurrencies, including Solana, Cardano and Ethereum, were “gifted in their entirety to his grandchildren and adult children.” Although financial disclosure records do not list exact amounts, they do broadly list the value of government officials’ investments. At this point, Blanche’s records show she had sent between $116,000 and $315,000 worth of money to her family. He said he sold additional crypto-related investments worth between $5,000 and $75,000. According to the ethics filing, the sale took place in late May or early June.
