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The US Department of Justice (DOJ) has launched a review of how victims of digital asset fraud are compensated in line with concerns about outdated assessment methods.
According to a recent internal DOJ memo, many investors affected by the Crypto platform received refunds based on the value of their holdings at the time they filed their claims rather than the current market rate, including FTX, celsius, Voyager, Genesis, Blockfi and Gemini Trust.
While not all of these bankruptcies stem from criminal charges, the DOJ highlighted the loss of many assets due to theft and fraud. As a result, investors missed out on the significant potential benefits they could have achieved if they had kept the crypto.
For context, when FTX filed for bankruptcy in November 2022, Bitcoin was traded for less than $20,000. By January 2025, the value of the highest digital assets had skyrocketed above $108,000, representing an increase of over 500%.
However, creditors are paid in Fiat currency based on their 2022 valuation. These repayments are far below the current value of the asset, even if interest is added.
The DOJ has allowed current regulations to limit recovery to the dollar value of assets during fraud. The agency said the approach effectively denied that the victim effectively denies the benefits of valuing the assets, despite taking the risk of loss.
One of the FTX creditors, Mr. Purple, emphasized the urgency of such reforms, noting that digital assets deserve legal recognition similar to traditional financial instruments under the bankruptcy law.
To address the issue, the DOJ has appointed the Office of Legal Policy and Legislative Affairs Office offices to assess potential regulatory and legislative updates. These changes could include bankruptcy reforms, particularly to reflect the unique characteristics of digital assets.
The wider cryptography shift of DOJ
This initiative forms part of a broader strategic change within DOJ’s approach to digital assets.
last week, Encryption The department reported that it had disbanded the National Cryptocurrency Enforcement Team (NCET), a unit initially focused on investigating crypto-related crimes.
Rather than investigating legitimate entities such as crypto exchanges, wallet providers and decentralized tools, the DOJ said it hopes personnel will focus on clear criminal activities such as fraud and market manipulation.
Additionally, DOJ is actively involved in President Donald Trump’s working group on digital asset markets. The group was established under Executive Order 14178 to assess the regulatory environment of the crypto industry.
DOJ provides lawyers to help draft suggestions and recommendations regarding law and agency guidance. These recommendations are compiled in a formal report to the President and are intended to modernize digital asset regulations to align with national policy goals.
Once the president approved the proposal, the DOJ promised to implement the recommended actions to make it more clear to the protection of investors for digital asset companies operating within the United States.
