New SDNY US Attorney to Cool Down Crypto Crackdowns after Bankman-Fried Conviction

The US Attorney’s Office for the Southern District of New York (SDNY) will scale back its crypto prosecutions. However, the office will finish a few prominent cases like Sam Bankman-Fried’s appeal.

Although the office won’t ignore crypto cases, it would reduce the resources and the number of lawyers working on these prosecutions.

A New Attorney for the SDNY

Donald Trump announced crypto ally Jay Clayton as the next US Attorney for the SDNY, thus explaining this détente.

According to a report from Reuters, the US Attorney’s office in Manhattan has seen a significant number of lawyers being directed to crypto cases since 2022. The fallout from the crypto winter saw many high-profile cases being tried in this District Court.

“You won’t see as much crypto stuff coming out of at least the SDNY in the future. We brought a lot of big cases in the wake of the crypto winter – there were a lot of important fraud cases to bring there – but we know our regulatory partners are very active in this space,” Scott Hartman, co-chief of securities and commodities task force at the SDNY announced in a New York conference.

This cool-down approach aligns with Donald Trump’s stated plan to quiet government anti-crypto efforts. Just yesterday, Trump announced his preferred candidate for SDNY US Attorney: Jay Clayton, former SEC Chief. Since leaving the SEC in 2020, Clayton has made increasing pro-crypto stances, showing a willingness to bring positive change.

However, this cool-down period won’t take place all at once. For one thing, Clayton won’t be able to take office until Trump’s inauguration in January. Additionally, the SDNY is wrapping up several high-profile cases, like FTX Co-Founder Sam Bankman-Fried.

Bankman-Fried is currently appealing his fraud conviction, and prosecutors are still trying to seize a bribery-linked account.

Sam Bankman-Fried Accused of Bribing Chinese Officials. Source:  NBC

Clayton may become the next US Attorney for the SDNY, Manhattan’s top prosecutor and “Sheriff of Wall Street,” but this doesn’t give him full control of the area’s legal posture. The current SDNY Attorney General is Letitia James, a sworn crypto opponent who even reiterated her pledge to crack down on the industry this year.

So far, Trump has not announced plans to replace her. However, he does have the authority to do so. After Trump’s electoral victory, James congratulated the new president-elect and offered to work with him if possible.

Overall, this might be an analogous situation to the earlier lawsuit filed by 18 US states against the SEC. The lawsuit signals a profound regulatory shift for the US crypto scene.