Software developers who build digital asset privacy tools will not be charged solely for creating code, acting Attorney General Todd Blanche said Monday, marking a shift in how the Justice Department approaches crypto-related prosecutions.
Blanche told attendees at the Bitcoin 2026 conference that federal prosecutors will target developers only when there is evidence they intended to help others commit crimes, particularly money laundering or sanctions violations. He spoke on a panel with FBI Director Kash Patel.
Shift away from "regulation by prosecution"
Blanche said the department has revised its approach under the current administration, moving away from what critics had called “regulation by prosecution,” where developers were swept into criminal cases based on how others used their tools.
He said investigators are now instructed to distinguish between:
- lawful software development, including open-source and decentralized tools, and
- conduct that shows a specific intent to enable crime, such as facilitating money laundering or evasion of U.S. sanctions.
Under this guidance, the mere creation of privacy-enhancing or mixing tools will not automatically trigger criminal liability. The focus, Blanche said, is on intent and direct facilitation of illegal conduct.
Context: Tornado Cash and Samourai Wallet cases
Blanche’s remarks followed a question from Paul Grewal about how developers should interpret prominent enforcement actions, including those involving Tornado Cash and Samourai Wallet. Both prosecutions began under the previous administration and continued under President Donald Trump.
Key cases cited include:
- Tornado Cash (Roman Storm)
- Convicted on one count of conspiracy to operate an unlicensed money-transmitting business.
- Jury deadlocked on conspiracy to commit money laundering and conspiracy to violate U.S. sanctions.
- Prosecutors have requested a retrial in October on the unresolved charges.
- Storm’s defense maintains he only wrote code, arguing that code should be treated as protected speech and that he did not control user activity.
- Samourai Wallet (Keonne Rodriguez and William Lonergan Hill)
- Both pleaded guilty to conspiracy to operate an unlicensed money-transmitting business.
- Sentenced to multi-year prison terms in November for running a bitcoin mixing service.
- Prosecutors argued the pair actively promoted the service in forums to people seeking to “clean” illicit funds.
Blanche said facts involving promotion to criminal users, awareness of illicit flows, or active efforts to conceal dirty funds remain central to whether the department brings charges.
Blanche’s memo and internal policy shift
Blanche, elevated to acting attorney general after the removal of Pam Bondi, previously served as deputy attorney general. In that role he authored a memo instructing the department to avoid using criminal law as a substitute for financial regulation in the digital asset sector.
The memo argued that:
- traditional regulatory oversight of digital assets should remain with specialist agencies, and
- criminal prosecutions should be reserved for clear cases of fraud, money laundering, sanctions evasion, or similar crimes, not for technical violations that resemble regulatory infractions.
His comments in Miami suggest that memo is now shaping frontline enforcement decisions, especially in cases involving privacy tools and open-source code.
Narrow but clearer path for privacy tool developers
Under the new approach, developers of privacy-enhancing technologies have a narrower but more clearly defined path:
- Writing and publishing code, including open-source and decentralized tools, is not itself a crime.
- However, prosecutors will scrutinize evidence of intent, such as:
- direct coordination with criminal groups,
- marketing that targets those seeking to hide illegal proceeds, or
- operational control that is used to steer or conceal illicit flows.
Blanche noted that while developers may avoid charges where there is no intent to facilitate crime, operators or service providers who knowingly process or promote illicit transactions will remain key targets.
FBI intensifies crackdown on "pig butchering" fraud rings
While Blanche focused on legal standards for developers, FBI Director Kash Patel emphasized the bureau’s efforts against “pig butchering” schemes — long-term romance and trust-based scams that funnel victims into fake digital asset platforms.
Patel said the FBI is expanding operations in Cambodia, Burma, and Thailand, where many of these schemes operate from large compounds, sometimes using forced labor.
According to data from the FBI’s Internet Crime Complaint Center:
- reported losses from cryptocurrency investment fraud rose to $7.2 billion in 2025;
- a significant portion is linked to pig butchering operations that groom victims over weeks or months before directing them to fraudulent trading or investment sites.
Patel stressed that the bureau’s work aims to draw a bright line between fraudulent conduct and legitimate virtual asset activity, so that enforcement targets organized crime rather than lawful users.
Global operations and asset seizures
Recent actions highlight a more coordinated international stance:
- joint operations have led to arrests in Thailand and the seizure of hundreds of scam websites used to defraud victims;
- the Justice Department’s Scam Center Strike Force has restrained over $700 million in cryptocurrency tied to money laundering from pig butchering schemes;
- the FBI’s “Operation Level Up” has proactively notified thousands of individuals that they were being targeted, with officials reporting that 77% of those contacted did not realize they were victims.
Patel said these campaigns will continue to expand, combining on-the-ground partnerships in Southeast Asia with efforts to seize digital assets and shut down infrastructure that supports cross-border fraud.
Implications for the digital asset ecosystem
The department’s stance signals:
- a reduced likelihood that developers will face charges solely because their tools are misused by others, and
- an ongoing readiness to prosecute those who run, promote, or profit from services that knowingly process illicit funds.
For traders and users of privacy tools, the practical effect is mixed. The tools themselves may remain available and lawful to develop, but platforms and operators that cross the line into deliberate facilitation of crime will continue to draw aggressive enforcement attention.
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