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U.S. Labor Department Picks Up Crypto Torch, Throws Out Previous Warnings

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The U.S. Department of Labor is reversing its earlier caution about including crypto investments in people’s retirement savings, arguing that issuing warnings about the hazards of digital assets failed to maintain appropriate neutrality about what the agency tells investment officials.

The new compliance directive issued on Wednesday clarified that the department has no business singling out assets for warnings or praise, though the move tracks with months of actions from the administration of President Donald Trump to throw out impediments to digital assets investment. Trump has said he’s seeking to be the crypto president.

“The Biden administration’s Department of Labor made a choice to put their thumb on the scale,” Secretary of Labor Lori Chavez-DeRemer said in a statement. “We’re rolling back this overreach and making it clear that investment decisions should be made by fiduciaries, not D.C. bureaucrats.”

The department under President Joe Biden had advised so-called 401(k) plan decisionmakers that crypto may be overly risky to count on for retirement planning.

«The department has serious concerns about the prudence of a fiduciary’s decision to expose a 401(k) plan’s participants to direct investments in cryptocurrencies, or other products whose value is tied to cryptocurrencies,» it said in the March 2022 compliance release. «These investments present significant risks and challenges to participants’ retirement accounts, including significant risks of fraud, theft, and loss.»

The warning came a few months before the industry leapt into a buzzsaw of shocking failures in which big names such as Celsius Network and Voyager Digital collapsed, leading to the sector-shaking disintegration of top global exchange FTX under a cloud of fraud accusations. Retirement investments in bitcoin BTC, for instance, would have slid about 52% over the 12 months following the Labor Department’s notice.

However, the assets have since climbed, and an investment made on the day of the warning would now be up a considerable 156%.

In 2023, California-based 401(k) provider ForUsAll sued the DOL in the U.S. District Court in Washington, D.C., alleging the agency didn’t follow the proper rules in issuing the guidance.

Under Trump, agencies including the Securities and Exchange Commission, Commodity Futures Trading Commission, Federal Deposit Insurance Corp. and Office of the Comptroller of the Currency have reconsidered their crypto stance and, in some cases, have begun reversing previous policy. When running for a seat in the House of Representatives, Chavez-DeRemer also received $1.5 million in backing from crypto super PAC Fairshake, though she ultimately lost her race before Trump tapped her for the Labor secretary position.

As the government seeks to make a sharp turn on the assets, Trump and his family have personally embraced the industry for their own business interests. The president recently attended a dinner thrown for the top investors in his own memecoin, while Trump Media and the Trump-tied World Liberty Financial are pursuing significant crypto moves even as the president’s administration considers how it’ll oversee such businesses.

Trump’s business ties have been raised as a central sticking point for U.S. legislation to establish guardrails for stablecoin issuers.

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Trump’s Memecoin Dinner Questioned by Top Democrat on House Judiciary Committee

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A senior Democrat in the House of Representatives, Jamie Raskin, joined his name to lawmakers seeking answers about President Donald Trump’s recent dinner for top investors in his memecoin, sending questions directly to Trump.

Raskin, the ranking Democrat on the House Judiciary Committee, has been a vocal critic of the president and becomes the latest of many from his party to probe details about the event, which they’ve called out as evidence of White House corruption. Because Raskin is in the minority party, his demands are unlikely to lead to further congressional action unless they regain the House or Senate in next year’s elections.

«I write today to demand that you release the names of all the attendees at this dinner and provide information about the source of the money they each used to buy $TRUMP coins, so that we can prevent illegal foreign government emoluments from being pocketed without congressional consent,» Raskin wrote this week to the president, joining many counterparts in the Senate in seeking the information, including Senators Elizabeth Warren, Chris Murphy and Richard Blumenthal.

«We deserve to know who is paying for access to our president, and what steps you took to ensure that the funds you receive are legitimate and legal, rather than the proceeds from foreign states or monarchs or illegal activities,» Rasking said, specifically highlighting Tron founder Justin Sun, a guest who was a major early investor in Trump’s family crypto operations.

Read More: Democrats Threaten Lawsuits, Join Protests Ahead of Trump Memecoin Dinner

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FTX Repayments May Have Positive Market Impact: Coinbase

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The FTX Recovery Trust will begin distributing over $5 billion in cash and stablecoins to creditors starting on Friday, with funds expected to land in accounts within the next three business days via BitGo and Kraken.

And there’s a chance this wave of repayments will help lift the crypto market, analysts at Coinbase wrote in a report on Friday.

It’s the second major round of repayments following the exchange’s collapse. The first, which began on Feb. 18, returned roughly $7 billion to creditors with claims under $50,000. That did little to lift broader crypto markets at the time, which remained under pressure from macro headwinds.

This latest wave of distributions comes as investor sentiment has shifted, the analysts said. Payments will arrive in stablecoins, offering recipients immediate on-chain liquidity, instead of cash and crypto. That could influence whether the funds are reinvested.

There’s also a broader sense of optimism in crypto markets, thanks in part to a rally in major assets and increased political clarity around regulation. Institutional players, in particular, may feel more comfortable acting on incoming funds, especially as Congress moves closer to passing legislation that would define the roles of U.S. regulators overseeing digital assets.

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Judge Declines to Order DOJ to Review Records in Roman Storm Case

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The federal judge overseeing Roman Storm’s prosecution declined to order the Department of Justice to review its records for any materials it might have missed that would help the Tornado Cash developer at the end of a 30-minute hearing Friday morning, though she told the government it should not have any disclosure issues.

Judge Katherine Polk Failla also ruled that there were no Brady violation concerns with the Department of Justice’s conversations with the Financial Crimes Enforcement Network (FinCEN) about whether mixers needed to register as money transmitters — the conversation that prosecutors pursuing Samourai Wallet developers had with FinCEN officials, but not the prosecutors on Storm’s case — one of the DOJ representatives said in the phone conference on Friday.

If the judge had found that prosecutors had withheld information, it could affect the case moving forward.

«I’m not going to require a further review based on the representations made that there’s no additional material of this type, and based on my views that I don’t believe the material was exculpatory,» she said.

«There’s a difference between ‘this is something I’d like to know’ and ‘this is a Brady violation,'» the judge said, referring to a Supreme Court precedent that requires prosecutors to share any and all information that might help a defendant with the defendant’s team.

Storm’s defense attorneys argued during the hearing that they needed to know when the prosecutors in their case learned about the FinCEN conversation.

«They do plan to say they’re charging a conspiracy to operate an unlicensed money transmitter,» said defense attorney Brian Klein. «My question is who are they supposed to be licensed with? … this is all in the same issue. They’ve only dropped one subpart … but they’re still going to say they’re charging an unlicensed money business.»

Thane Rehn, a prosecutor who worked on the DOJ case against Sam Bankman-Fried, said that his team wouldn’t argue that Tornado Cash needed to secure a license.

«The word ‘license’ doesn’t apply here and the jury won’t be instructed on licensing issues … what we intend to prove at trial is the defendant knew they were transmitting funds derived from criminals,» he said.

The judge did at multiple points ask the prosecutors if they planned to change any other theories or charges in the weeks leading up to the trial, saying doing so might be unfair to the defense. The trial is supposed to kick off in less than two months.

Read more: DOJ Will Still Pursue Roman Storm Case Despite Blanche Memo, Prosecutors Say

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