Wave Digital Assets Seeks DOJ Probe into U.S. Marshals’ Crypto Handling

Firm cites repeated procurement failures, unresolved OIG audit findings, and transparency concerns under FOIA

Wave Digital Assets today formally requested that the Department of Justice Office of the Inspector General (“OIG”) initiate a comprehensive investigation into the United States Marshals Service’s (“USMS”) management of seized cryptocurrency assets. This request follows years of documented deficiencies, repeated procurement failures, unresolved audit findings, and recent public reporting, raising serious questions about custody, oversight, and transparency.

The formal and urgent complaint submitted by Wave concerns credible public allegations that more than $40 million in seized United States government cryptocurrency has been unlawfully transferred from government-controlled wallets. These allegations reveal serious and unremedied failures in the USMS procurement, contractor selection, and oversight processes for cryptocurrency custody. These failures not only permitted the alleged loss to occur, but continue to expose government-held digital assets to immediate, foreseeable, and preventable compromise.

“Since its inception, Wave Digital has adhered to established regulatory guidelines and processes. In the context of financial instruments, these frameworks exist to protect consumers and secure assets. It became evident that the USMS gave insufficient consideration to the fundamental laws governing the proper handling of these assets,” said Les Borsai, co-founder of Wave Digital Assets. “The rationale for its position is documented in the denial of our agency protest and reinforced by the clarity of the GAO’s decision. We will continue to pursue reform of this process, not for self-interest, but for the long-term integrity of digital assets.”

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Wave participated in a Request for Information (RFI) and subsequent procurement process administered by the USMS beginning in 2023. This process represented the third consecutive USMS procurement attempt related to this mandate, following prior efforts dating back to 2019 that failed to result in a durable, compliant solution. Earlier outcomes included awards to BitGo, and Anchorage, each of which was later rescinded for various reasons – underscoring persistent structural and operational challenges within the program.

Wave advanced through the most recent procurement process with the highest evaluation scores and presented demonstrably superior technical capabilities, proposed to perform the work at a lower cost, and structured its bid around licensed, regulated fiduciaries and auditable internal controls consistent with federal expectations for safeguarding high-risk government assets.

Wave is an SEC-registered investment adviser under the Investment Advisers Act of 1940 and proposed custody through BitGo Bank & Trust, National Association (“BitGo”), which is now a federally chartered digital asset bank regulated by the Office of the Comptroller of the Currency and subject to SEC oversight as a publicly-traded company. This structure provided clear accountability, segregation of duties, personnel vetting, and enforceable compliance obligations.

“At its core, the Investment Advisers Act of 1940 is an anti-fraud statute,” said Nicole Trudeau, General Counsel of Wave. “It was enacted to prevent insider abuse and the misuse of entrusted assets—precisely the conduct now alleged. The facts emerging here read like a textbook illustration of why Congress put those safeguards in place. When fiduciary controls are disregarded, fraud risk is not theoretical—it is predictable and preventable. The serious question here is why the government declined to apply the very protections it mandates for the public when it assumed responsibility for safeguarding these assets on behalf of its own citizens.”

By contrast, Command Services & Support (“CMDSS”) and its proposed subcontractors lacked comparable regulatory licenses, fiduciary duties, and supervisory regimes, yet the award was ultimately made to them. Wave filed a protest at the agency level, followed by a protest at the Government Accountability Office (GAO), and is currently pursuing relief before the U.S. Court of Federal Claims, where its case remains ongoing.

Wave’s protest filings raise issues reflected in the public record, including:

• Whether the awardee possesses the regulatory licenses and registrations required to manage, custody, and dispose of cryptocurrency assets
• Whether the USMS improperly awarded the contract to an unregulated and unqualified entity
• Whether the USMS failed to properly evaluate Wave’s proposed structure, in which Wave would serve as the Registered Investment Adviser
• Whether the USMS improperly disregarded the use of a qualified custodian and institutional-grade software and data providers as a system of checks and balances
• Whether the evaluation process contained material inconsistencies, including unexplained changes in Wave’s scoring
• Whether organizational conflicts of interest were adequately disclosed, reviewed, and mitigated

Throughout the process, Wave clearly articulated the need for checks and balances in the management of seized government digital assets. Wave proposed a structure in which it would act as the Registered Investment Adviser, supported by BitGo, a qualified custodian, and an independent software and data provider as partners – each serving a distinct and complementary role. The software and data provider would have provided continuous, independent monitoring of asset inventories, wallet locations, and transaction activity, creating an additional layer of security and oversight. The USMS rejected this approach, treating the mandate primarily as a technology function and awarding the contract to a vendor with which it had an existing relationship. This approach mirrored the structural weaknesses identified by the OIG in its 2022 audit.

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FOIA Transparency Concerns

Wave and cryptocurrency consulting firm ECC Solutions have also raised concerns regarding transparency and public accountability through the Freedom of Information Act (“FOIA”). On January 27, 2026, ECC Solutions submitted a formal FOIA appeal to the USMS seeking transaction-level records related to cryptocurrency dispositions conducted since November 5, 2024. Rather than processing the request directly, USMS referred it to another DOJ component that has acknowledged it will only process records originating with that component.

The FOIA appeal argues that this referral is procedurally improper and risks preventing disclosure of the very records necessary for meaningful transparency. The appeal highlights long-standing operational deficiencies within the USMS Complex Assets Unit, many of which were identified in the 2022 OIG audit and remain unresolved. The appeal was submitted to the Office of Information Policy and directly to the USMS Director, where it is now part of the public record.

During the course of its legal proceedings, Wave obtained a stay halting asset liquidations, consistent with a Presidential Executive Order directing that no liquidations occur. During this period, Wave was informed that it could face fines of approximately $1 million per month for interfering with the awardee’s ability to proceed, and that liability for frozen liquidations would not be lifted unless liquidations resumed.

Wave has submitted a detailed letter outlining these concerns to the Department of Justice Office of the Inspector General and is filing that letter with the U.S. Court of Federal Claims.

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