U.S. Deputy Attorney General Todd Blanche is under fire from Senate Democrats following his recent decision to narrow the Department of Justice’s (DOJ) crypto enforcement priorities and disband its crypto enforcement squad.

In a Thursday letter to Blanche, six Senate Democrats — Sens. Mazie Hirono (D-Hawaii), Elizabeth Warren (D-Mass.), Dick Durbin (D-Ill.), Sheldon Whitehouse (D-R.I), Chris Coons (D-Del.) and Richard Blumenthal (D-Conn.) — blasted his decision to cut the National Cryptocurrency Enforcement Team (NCET) as “giv[ing] a free pass to cryptocurrency money launderers.”

The Senators called Blanche’s directive that DOJ staff no longer pursue cases against crypto exchanges, mixers or offline wallets “for the acts of their end users” or bring criminal charges for regulatory violations in cases involving crypto, including violations of the Bank Secrecy Act (BSA), “nonsensical.”

“By abdicating DOJ’s responsibility to enforce federal criminal law when violations involve digital assets, you are suggesting that virtual currency exchanges, mixers, and other entities dealing in digital assets need not fulfill their [anti-money laundering/countering the financing of terrorism] obligations, creating a systemic vulnerability in the digital assets sector,” the lawmakers wrote. “Drug traffickers, terrorists, fraudsters, and adversaries will exploit this vulnerability on a large scale.”

In his memo to DOJ staff on Monday evening, Blanche cited U.S. President Donald Trump’s January executive order on crypto, which promised to bring regulatory clarity to the crypto industry, as the reason for his decision.

“The Department of Justice is not a digital assets regulator,” Blanche wrote, adding that the agency will “no longer pursue litigation or enforcement actions that have the effect of superimposing regulatory frameworks on digital assets while President Trump’s actual regulators do this work outside the punitive criminal justice framework.”

Instead, Blanche urged DOJ staff to focus their enforcement efforts on prosecuting criminals who use “victimize digital asset investors” or those who use crypto in the furtherance of other criminal schemes, like organized crime, gang financing, and terrorism.

Read more: DOJ Axes Crypto Unit As Trump’s Regulatory Pullback Continues

For the Senate Democrats, however, Blanche’s claim doesn’t quite cut the mustard.

“You claim in your memo that DOJ will continue to prosecute those who use cryptocurrencies to perpetrate crimes. But allowing the entities that enable these crimes — such as cryptocurrency kiosk operators — to operate outside the federal regulatory framework without fear of prosecution will only result in more Americans being exploited,” the lawmakers wrote.

The lawmakers urged Blanche to reconsider his decision to dismantle NCET, calling it a “critical resource for state and local law enforcement who often lack the technical knowledge and skill to investigate cryptocurrency related crimes.”

New York Attorney General Letitia James raised similar concerns in her own letter to Congress on Thursday, urging lawmakers to pass federal legislation to regulate the crypto markets. Though her letter itself made no mention of Blanche’s memo or the shuttering of NCET, a press release from her office highlighted that her letter “comes after the [DOJ] announced the dismantling of federal criminal cryptocurrency fraud enforcement, making a robust regulatory framework all the more critical.”

With a signature from President Donald Trump, the decentralized financial (DeFi) corner of the crypto sector is now freed from U.S. Internal Revenue Service demands that such platforms be treated as brokers and required to track and report user activity.

That narrowly focused IRS rule, approved in the final days of former President Joe Biden’s administration, has been formally struck down, according to Representative Mike Carey, an Ohio Republican who backed the effort. And the agency is prevented from pursuing anything like it, according to the Congressional Review Act power used by lawmakers to get rid of the tax regulation.

Though the issue was relatively limited, its completion marks the first time a pro-crypto effort has cleared the U.S. Congress.

Both the Senate and House of Representatives agreed to reverse the IRS action with strong bipartisan showings, further underlining the crypto sector’s strength in this Congress. That could bode well for the industry’s chances with other more wide-ranging matters, including legislation to regulate stablecoin issuers and to set market rules for crypto transactions.

Trump’s signature on the DeFi tax resolution puts that concern for DeFi in the rearview. The next crypto priority in Congress has been stablecoin legislation. Similar bills have passed relevant committees in both the House and Senate and are awaiting floor votes in each chamber. Approvals would start a process to meld the two efforts into one compromise version.

The president has called for a bill to arrive on his desk by August, and the lawmakers behind the legislation have said such a timeline is still possible.

Nova Labs, the parent company behind the Helium blockchain, has agreed to pay the U.S. Securities and Exchange Commission (SEC) $200,000 to settle civil securities fraud charges the regulator filed against the firm in January, a court filing said Thursday.

Without admitting or denying any wrongdoing, Nova Labs agreed to pay the fine to settle accusations that it misled institutional investors during a funding round from late 2021 to early 2022, during which it raised $200 million in fresh capital at a $1 billion valuation. In its complaint, the SEC accused Nova Labs of lying to prospective investors about a number of big-name enterprise customers — including Nestle, Salesforce and Lime — it claimed were using the Helium technology.

The SEC accused Nova Labs of repeatedly exaggerating the nature of its relationships with these three corporations in order to secure investments, touting them as customers and “users” of its tech. According to the complaint, Nova Labs’ actual contact with Lime, Salesforce and Nestle was limited and primarily occurred before the launch of the Helium network in mid-2019.

For example, according to the SEC, the extent of Nestle’s relationship with Nova Labs was a small-scale test of some of the company’s component hardware in its water-delivery business in 2018, before Nova Labs was even in the crypto business. Its relationship with scooter company Lime was limited to two in-person demonstrations of Nova Labs’ component hardware to an audience of just two Lime employees — at least one of whom left the company shortly afterwards —in early 2019, the SEC said.

Both Nestle and Lime eventually sent Nova Labs cease-and-desist orders, according to the SEC, threatening the company with legal action if it continued to use their trademarks and otherwise claiming to have an ongoing relationship with them, the complaint alleged.

As part of Nova Labs’ settlement agreement with the SEC, the regulator agreed to drop two other claims that the company violated federal securities laws, including through the sale of three of its tokens — the Helium Network Token (HNT), the Helium Mobile Network Token (MOBILE) and the Helium IoT Network Token (IOT) — which the SEC alleged in January to be securities, according the settlement agreement. Those claims were dropped with prejudice, meaning the SEC is barred from bringing a future case under the same allegations.

Nova Labs celebrated the settlement in a Thursday blog post, calling it a “major win for Helium and the People’s Network.”

“With this dismissal, we can now definitively say that all compatible Helium Hotspots and the distribution of HNT, IOT and MOBILE tokens through the Helium Network are not securities,” the blog post said. “The outcome establishes that selling hardware and distributing tokens for network growth does not automatically make them securities in the eyes of the SEC.”

The blog post made no mention of the $200,000 settlement or the claim that Nova Labs misled investors.

When reached for comment, Nova Labs Chief Legal Officer Sarah Aberg told CoinDesk that while the settlement agreement prohibits the company from either admitting or denying the claims, “we can point out that, both at the time of those statements and today, data usage on the Helium Network has always been publicly available.”

The settlement agreement, filed in the Southern District of New York (SDNY) on Thursday, is subject to approval by a federal judge.