US Department of Justice: ‘Well-Intentioned Innovators’ Will Not Be Prosecuted

Recent statements from the US Department of Justice, the White House, and the Commodity Futures Trading Commission indicate a safer environment for responsible risk-taking in digital assets and derivatives.

The acting assistant attorney general announced on August 21, 2025 that from the current US administration’s Department of Justice (DOJ), “well-intentioned innovators” in the field of digital assets “should not fear for their liberty.” [1]

This comes on the heels of an important first from the Commodity Futures Trading Commission’s (CFTC) Division of Enforcement (DOE): On July 9, it issued an Advisory publicly addressing when DOE staff will consider referring potential violations of the Commodity Exchange Act (CEA) for evaluation of criminal prosecution by DOJ. DOE staff explained that the Advisory implements the president’s Executive Order 14294, which directs every agency to publish guidance on how it plans to refer alleged offenses to DOJ. With these regular public statements, the administration continues to reassure market participants that responsible innovation should not be deterred by the possibility of a technical misstep.

The Executive Order 14294 articulates a policy disfavoring criminal enforcement of regulatory offenses—which it defines as a “federal regulation that is enforceable by a criminal penalty”—and requires each agency to issue guidance on its policies concerning referrals to DOJ. The guidance must include the following factors:

• The harm or risk of harm, pecuniary or otherwise, caused by the alleged offense
• The potential gain to the putative defendant that could result from the offense
• Whether the putative defendant held specialized knowledge, expertise, or was licensed in an industry related to the rule or regulation at issue
• Evidence, if any is available, of the putative defendant's general awareness of the unlawfulness of his conduct as well as his knowledge or lack thereof of the regulation at issue

This directive is particularly important for the CFTC because under the CEA, it is a felony for any person “willfully” to violate the statute or the CFTC’s regulations thereunder. [2]

The CFTC’s new Advisory tracks the factors in Executive Order 14294 and adds two more: (1) whether the putative defendant is a recidivist or has otherwise engaged in a pattern of misconduct, and (2) whether the involvement of DOJ will provide additional meaningful protection to participants in the derivatives markets.

With this directive and the CFTC’s adherence to the Executive Order, the agency is sending a clear signal: market participants can expect to see less DOJ involvement in CEA enforcement, except in the most serious cases.

BACKGROUND

The CFTC is the primary agency responsible for enforcing compliance with federal laws and regulations governing derivatives transactions. It utilizes a range of mechanisms to ensure that market participants observe legal and regulatory requirements. Investigations and enforcement actions are vital mechanisms of enforcement. The CFTC has the authority to investigate potential violations of the CEA and take action against companies or individuals engaged in illegal practices. Enforcement actions can result in significant sanctions, including penalties, disgorgement, and prohibitions from participating in derivatives markets.

Over the past decade, CFTC policy has favored parallel civil and criminal investigations and actions. Major examples include the manipulation of LIBOR, the first criminal “spoofing” case, United States v. Coscia, [3] and charges of oil-market manipulation against Glencore International A.G., Glencore Ltd., and Chemoil Corporation. [4] Perhaps most notably, during the first Trump administration, the CFTC and DOJ brought parallel charges against the founders of the BitMEX crypto exchange—the CFTC for allegedly operating an unregistered trading platform, [5] and DOJ for allegedly failing to establish, implement, and maintain an adequate anti-money laundering program. [6] Looking back further, the CFTC and criminal authorities have routinely acted in parallel on run-of-the-mill fraud cases.

There is generally no public information about the genesis of such investigations (i.e., whether there was a referral one way or the other)—indeed, aside from instances where parallel actions have been announced, the public has had little visibility into what cooperation or coordination takes place day to day. But it is public that members of the CFTC staff have broadly delegated authority to share information with other agencies, including the DOJ. [7] In light of the history of parallel enforcement and criminal actions, it is reasonable to assume that such information sharing has been commonplace.

LOOKING FORWARD

The CFTC’s new Advisory, against the backdrop of similarly toned pronouncements from the White House and DOJ, heralds a more restrained, top-down approach in seeking criminal enforcement, changing course from the DOE’s historical practice of making such decisions at the staff level. It also conforms to a recent trend in favor of deregulating the markets across federal agencies. Recently, on March 27, the DOJ launched an Anticompetitive Regulations Task Force aimed at identifying and eliminating anticompetitive federal and state laws and regulations.

Nonetheless, market participations should remain cautious and prioritize compliance. While current-administration regulators may be more cautious to pursue criminal prosecution, and agencies are likely to prioritize resources to target the most serious offenses, future administrations may revert to the earlier policy favoring DOJ involvement, including for past violations that may still be within the applicable statute of limitations.