Crypto-critical US Senator Elizabeth Warren has led six Senate Democrats in urging the Department of Justice to reverse its decision to terminate its crypto investigations and prosecutions division.

In an April 10 letter to Deputy Attorney General Todd Blanche, the Senators said the decision to disband the department’s National Cryptocurrency Enforcement Team was a “grave mistake” that would support “sanctions evasion, drug trafficking, scams, and child sexual exploitation.”

Senators Richard Durbin, Mazie Hirono, Sheldon Whitehouse, Christopher Coons and Richard Blumenthal signed the letter in addition to Warren.

On April 7, Blanche shuttered the DOJ’s crypto enforcement team, saying in a memo that “The Department of Justice is not a digital assets regulator.”

The senators claim that the decision gave a “free pass to cryptocurrency money launderers” and claimed that crypto mixing services — used to obfuscate blockchain transactions — are “go-to tools for cybercriminals.” 

“It makes no sense for DOJ to announce a hands-off approach to tools that are being used to support such terrible crimes,” the letter said.

An excerpt of Democrat’s letter to the DOJ. Source: US Senate Committee on Banking, Housing, and Urban Affairs

The senators also questioned why the Justice Department  had decided not to prosecute a “host of crimes involving digital assets, including violations of the Bank Secrecy Act.”

They claimed that this creates a “systemic vulnerability in the digital assets sector,” which “drug traffickers, terrorists, fraudsters, and adversaries” will exploit on a large scale. 

The lawmakers requested a staff-level briefing no later than May 1, providing “detailed information on the rationale behind these decisions.” 

Targeting Trump family crypto endeavors 

The letter also took a swipe at the Trump family’s crypto projects, suggesting potential conflicts of interest.

Related: SafeMoon boss cites DOJ’s nixed crypto unit in latest bid to toss suit

A press release accompanying the letter stated that the senators are raising concerns about the “potential connections” between the DOJ’s actions and the crypto ventures of President Donald Trump and his family.

The Trumps have an interest in and have backed the crypto platform World Liberty Financial along with its token. The platform is also planning to launch a stablecoin while President Trump’s sons, Eric Trump and Donald Trump Jr., are working to launch a crypto-mining company called American Bitcoin.

“Your decisions give rise to concerns that President Trump’s interest in selling his cryptocurrency may be the reason for easing law enforcement scrutiny,” the Democrats stated.  

In a memo announcing the crypto enforcement team’s disbandment, Blanche accused the Biden administration of using the Justice Department to “pursue a reckless strategy of regulation by prosecution.”

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It may be too early for Bitcoiners to start getting bullish over the longer-term impacts of a potential recession on Bitcoin’s price, says 10x Research head of research Markus Thielen.

Thielen said in an April 11 markets report that credit spreads continue to widen, indicating that “recessionary concerns may be seeping deeper into the economy.”

“Expecting a bullish impulse is too early,” he said.

Bitcoin may face short-term headwinds

While the long-term effects of a recession could be bullish for Bitcoin (BTC) — due to the monetary easing that typically follows US Federal Reserve rate cuts — Thielen warned that Bitcoin may face headwinds before gaining bullish momentum.

“Normally, Bitcoin first sells off when China devalues or the Fed cuts, as the first cut might not be so impactful and also confirms economic weakness,” Thielen told Cointelegraph. 

Bitcoin is trading at $80,620 at the time of publication. Source: CoinMarketCap

White House crypto and AI czar David Sacks said in an April 10 X post that it is “time for a rate cut” after the core Consumer Price Index increased 2.8% year-by-year for March, the lowest it has been since March 2021.

CME Group’s FedWatch Tool shows a 64.8% chance of no rate cut at the Federal Reserve’s May Federal Open Market Committee meeting.

Traders typically see interest rate cuts and monetary supply expansions as positively affecting asset prices, especially Bitcoin and other cryptocurrencies.

However, Thielen said that historically, when year-over-year credit spreads “begin to widen,” Bitcoin often faces more downside pressure and takes longer to recover.

Related: Bitcoin ‘significantly de-risked here’ as nearly 80% of cyclical price correction is done — Analyst

“This pattern suggests that while a longer-term opportunity may emerge, Bitcoin could still face pressure in the near term,” Thielen said. He added that currency devaluations have also historically been bearish for markets in the short term before being bullish in the long term.

It comes amid growing concern among market participants over the weakening US dollar.

The US Dollar Index (DXY) is sitting at 100.337, down 2.92% over the past five days, according to TradingView data. 

The DXY is sitting at 100.337 at the time of publication. Source: TradingView

Trading resource account, The Kobeissi Letter, said in an April 10 X post, “The US dollar has exited the room. Once again, something is broken.”

Meanwhile, BlackRock’s head of digital assets, Robbie Mitchnick, said in late March that Bitcoin would most likely thrive in a recessionary macro environment. 

“I don’t know if we’ll have a recession or not, but a recession would be a big catalyst for Bitcoin,” Mitchnick said.

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This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

US authorities have charged a tech app founder with fraud, alleging that his advertised artificial intelligence-powered e-commerce app actually relied on human workers in the Philippines.

Albert Saniger of Barcelona, Spain, founder and former CEO of the company Nate, was charged with one count of securities fraud and wire fraud, the Justice Department said in an April 9 statement, while the Securities and Exchange Commission filed a parallel civil action.

Court documents said Saniger founded Nate around 2018 and launched an app of the same name in July 2020, marketing it as an AI-powered universal shopping cart that offered users the ability to complete online retail transactions, including filling in shipping details and sizing, without human input.

The Justice Department alleged that, in reality, “Saniger used hundreds of contractors, or ‘purchasing assistants,’ in a call center located in the Philippines to manually complete purchases occurring over the nate app.”

Source: US Attorney’s Office, Southern District of New York

Investors gave Saniger over $40 million, feds say

Acting US Attorney for New York Matthew Podolsky alleged Saniger duped investors by “exploiting the promise and allure of AI technology to build a false narrative about innovation that never existed.” 

Under the guise of investing in the AI-powered app, Sangier allegedly solicited more than $40 million in investments from venture capital firms and told employees to hide the true source of Nate’s automation. 

“This type of deception not only victimizes innocent investors, it diverts capital from legitimate startups, makes investors skeptical of real breakthroughs, and ultimately impedes the progress of AI development,” Podolsky said. 

The company acquired AI technology from a third party and had a team of data scientists develop it, but authorities claimed the app never achieved the ability to consistently complete e-commerce purchases, and its actual automation rate was effectively zero. 

Related: Aussie regulator to shut 95 ‘hydra’ firms linked to crypto, romance scams

During a busy holiday season in 2021, it’s alleged that Sanger directed Nate’s engineering team to develop bots to automate some transactions on the app along with the human workers. 

Nate ceased operations in January 2023, and Saniger terminated all of Nate’s employees after media reports started casting doubt on the app’s capabilities, according to the SEC’s court filing. 

The securities and wire fraud charges each carry a maximum sentence of 20 years behind bars. The SEC suit is asking the courts to ban Saniger from holding office in any similar company and return investor funds.

Cointelegraph contacted Nate for comment. Information on Saniger’s lawyers was not immediately available. 

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