Power Shifts to States in Crypto Enforcement

As SEC Pulls Back, Leaving Some Crypto Litigators in Limbo, States and Congress Push Ahead

The SEC has dropped investigations into major crypto platforms and, at the same time, Trump has issued additional executive orders against Am Law 200 firms that largely backed prosecutions of cases against him, chilling dissent. The SEC shuttered its Crypto Enforcement Unit, and the U.S. Department of Justice disbanded its National Cryptocurrency Enforcement Team.

“I don’t expect aggressive enforcement in the crypto industry absent fraud or other intentional wrongdoing,” said Renato Mariotti, a partner at Paul Hastings in the Am Law 30 firm’s investigations and white-collar defense practice. “The administration is focused on putting a comprehensive regulatory framework in place.”

Now, some attorneys said, the power has shifted to the states to prosecute claims against individuals and companies in the crypto sphere, as seen in a Thursday letter to Congress by New York State Attorney General Letitia James, who warned that the lack of strong federal regulations on crypto increased the risk of fraud, criminal activity and financial instability.

Do Trump Admin Policies Mean Reduced Risk of White-Collar Prosecutions?

Those trying to gauge what Trump 2.0 means for directors’ and officers’ liability will want to read the Wall Street Journal’s April 13, 2025, article entitled “Trump Administration Retreats from White-Collar Criminal Enforcement.” […]

If there are indeed fewer white-collar investigations and prosecutions, it could also mean fewer follow-on corporate and securities lawsuits, as well. Over the last several years, it has been a recurring phenomenon that companies facing criminal charges often are hit with tagalong civil lawsuits, filed against companies and their senior executives, alleging that the failure to prevent the underlying misconduct or the failure to make full disclosures about the underlying activity violated duties to investors and others. A reduction in the number of corporate investigations and prosecutions could also mean a reduction in the number of these kinds of follow-on lawsuits.

SEC Cuts Access to Mandated Diversity Office Amid DEI Purge

The SEC has quietly erased the online home of its federally mandated Office of Minority and Women Inclusion, as President Donald Trump seeks to end federal diversity, equity, and inclusion programs.

The Securities and Exchange Commission’s main web page for the office went away sometime after March 2, according to a Bloomberg Law review of archived versions of the agency’s website. The page has been replaced with an error message.

It is unclear whether the Office of Minority and Women Inclusion is operational Monday. But Nathaniel Benjamin still was listed as the office’s director in an online SEC directory of senior agency officials. He was one of about a dozen employees working in the office earlier this year, according to SEC records. Benjamin became director in 2024.