Wave Digital Assets Calls for DOJ Inspector General Investigation into U.S. Marshals Service Cryptocurrency Management
Wave Digital Assets (“Wave”) has formally petitioned the Department of Justice Office of the Inspector General (“OIG”) to launch a comprehensive investigation into the United States Marshals Service’s (“USMS”) handling of seized cryptocurrency assets. The request follows years of documented operational failures, repeated procurement breakdowns, unresolved audit findings, and recent public disclosures that collectively raise serious concerns about asset custody, oversight, transparency, and compliance with federal regulatory standards.
In its submission to the OIG, Wave alleges that systemic weaknesses within the USMS cryptocurrency asset management program have resulted in significant vulnerabilities that threaten the security of government-held digital assets. Central to the complaint are credible public reports suggesting that more than $40 million in seized government cryptocurrency may have been improperly transferred from wallets controlled by the U.S. government. If substantiated, these allegations would represent a profound failure of internal controls, procurement oversight, and fiduciary safeguards within a program entrusted with safeguarding billions of dollars in digital assets on behalf of U.S. taxpayers.
Allegations of Asset Mismanagement and Systemic Failures
Wave’s complaint asserts that the alleged unauthorized transfers are not isolated incidents, but rather the foreseeable outcome of structural deficiencies in the USMS’s approach to cryptocurrency custody and contractor oversight. According to Wave, the agency’s procurement processes have repeatedly failed to prioritize regulatory compliance, fiduciary accountability, and institutional-grade security frameworks—elements that are widely recognized as essential for managing high-risk digital assets.
Wave argues that these deficiencies have persisted despite years of warnings, failed procurement attempts, and explicit findings from the Department of Justice’s own Inspector General. The firm contends that the USMS’s continued reliance on inadequately regulated contractors and insufficient oversight mechanisms has left government-controlled cryptocurrency assets exposed to preventable risks.
“These failures did not arise overnight,” said Les Borsai, co-founder of Wave Digital Assets. “They are the result of a prolonged pattern of disregarding established regulatory principles that exist to protect assets and ensure accountability. When the government assumes responsibility for safeguarding digital assets, it must adhere to the same standards it imposes on private-sector fiduciaries. The record shows that the USMS failed to do so.”
Borsai further emphasized that Wave’s actions are motivated not by commercial self-interest, but by the broader need to strengthen institutional safeguards in the rapidly evolving digital asset ecosystem. “We will continue to pursue reform of this process because the integrity of government digital asset management is fundamental to public trust and market stability,” he said.
Wave’s Participation in the USMS Procurement Process
Wave’s involvement in the USMS procurement process began in 2023, when the agency issued a Request for Information (RFI) as part of its effort to modernize its approach to cryptocurrency custody and disposition. This initiative represented the third major attempt by the USMS to establish a durable solution for managing seized digital assets, following earlier procurement efforts dating back to 2019.
Those earlier efforts resulted in tentative awards to firms such as BitGo and Anchorage, both of which were later rescinded for various reasons. Wave argues that these repeated reversals underscore deeper structural and operational challenges within the USMS’s digital asset program.
During the most recent procurement cycle, Wave advanced through the evaluation process with what it describes as the highest technical scores and a demonstrably superior proposal. The firm claims it offered a comprehensive solution built on licensed and regulated fiduciaries, robust internal controls, and institutional-grade security infrastructure—while also proposing to deliver the services at a lower cost than competing bidders.
Wave is an SEC-registered investment adviser operating under the Investment Advisers Act of 1940. In its proposal, Wave structured custody through BitGo Bank & Trust, National Association (“BitGo”), 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. Wave argues that this structure would have provided clear lines of accountability, segregation of duties, personnel vetting, and enforceable compliance obligations consistent with federal expectations for safeguarding sensitive government assets.
“At its core, the Investment Advisers Act of 1940 is an anti-fraud statute designed to prevent misuse of entrusted assets,” said Nicole Trudeau, General Counsel of Wave. “The allegations now emerging illustrate precisely why Congress enacted these safeguards. When fiduciary controls are ignored, the risk of misconduct is not hypothetical—it is predictable and preventable. The question is why the government declined to apply the same protections it requires of private-sector custodians when it assumed responsibility for safeguarding its own digital assets.”
Controversial Contract Award and Legal Challenges
Despite Wave’s proposal and evaluation performance, the USMS ultimately awarded the contract to Command Services & Support (“CMDSS”) and its subcontractors. Wave contends that CMDSS lacked the regulatory licenses, fiduciary obligations, and supervisory frameworks necessary to manage seized cryptocurrency assets in compliance with federal standards.
Wave filed a formal protest at the agency level, followed by an appeal to the Government Accountability Office (GAO). After the GAO denied its protest, Wave initiated litigation before the U.S. Court of Federal Claims, where the case remains pending.
In its filings, Wave raised multiple concerns reflected in the public record, including:
- Whether the selected contractor possessed the regulatory licenses and registrations required to manage and dispose of cryptocurrency assets.
- Whether the USMS improperly awarded the contract to an unregulated and unqualified entity.
- Whether the agency failed to properly evaluate Wave’s proposed structure, in which Wave would serve as the Registered Investment Adviser supported by regulated custodial partners.
- Whether the USMS disregarded the use of a qualified custodian and independent software and data providers as essential checks and balances.
- Whether the evaluation process contained material inconsistencies, including unexplained changes in Wave’s scoring.
- Whether potential organizational conflicts of interest were adequately disclosed, reviewed, and mitigated.
Wave maintains that its proposed model reflected best practices widely adopted across regulated financial markets. Under its framework, Wave would act as the fiduciary investment adviser, BitGo would serve as the qualified custodian, and an independent software and data provider would continuously monitor asset inventories, wallet addresses, and transaction activity. This multi-layered structure, Wave argues, would have created a robust system of checks and balances designed to minimize fraud risk and operational failures.
Instead, Wave claims, the USMS treated the mandate primarily as a technology procurement and awarded the contract to a vendor with which it already had an established relationship. According to Wave, this approach replicated the very structural weaknesses identified in the DOJ OIG’s 2022 audit of the USMS’s Complex Assets Unit.
FOIA Transparency and Accountability Concerns
Beyond procurement issues, Wave and cryptocurrency consulting firm ECC Solutions have raised concerns about transparency and compliance with the Freedom of Information Act (“FOIA”). On January 27, 2026, ECC Solutions submitted a formal FOIA appeal seeking transaction-level records related to cryptocurrency dispositions conducted by the USMS since November 5, 2024.
Rather than processing the request directly, the USMS referred it to another DOJ component, which has indicated that it will only process records originating within that component. The FOIA appeal argues that this referral is procedurally improper and undermines the public’s ability to access records essential for understanding how seized digital assets have been managed.
The appeal also highlights long-standing operational deficiencies within the USMS Complex Assets Unit—many of which were documented in the 2022 OIG audit and, according to Wave and ECC Solutions, remain unresolved. The appeal was submitted to the DOJ Office of Information Policy and directly to the USMS Director, where it now forms part of the public record.
Wave argues that transparency is not merely a procedural obligation but a fundamental safeguard in an environment where digital assets can be transferred instantly and irreversibly. Without timely disclosure of transaction data, the firm contends, meaningful oversight becomes impossible.
Legal Pressure and Operational Implications
During its litigation against the USMS, Wave obtained a stay halting asset liquidations, consistent with a Presidential Executive Order directing that no liquidations occur during the pendency of certain reviews. However, Wave claims that it faced significant pressure during this period.
According to Wave, the firm was informed that it could be subject to fines of approximately $1 million per month for interfering with the awardee’s ability to proceed with asset management operations. Wave further alleges that it was told liability for frozen liquidations would not be lifted unless liquidations resumed, effectively placing the firm in a position where it had to weigh its legal rights against the risk of substantial financial penalties.
Wave has detailed these concerns in its letter to the DOJ OIG and has filed the same documentation with the U.S. Court of Federal Claims.
Broader Implications for Government Digital Asset Management
Wave’s complaint arrives at a time when the U.S. government’s holdings of seized cryptocurrency are increasing rapidly due to law enforcement actions, regulatory enforcement, and criminal forfeiture proceedings. As digital assets become a more prominent component of government-managed property, the stakes associated with secure custody and transparent oversight continue to rise.
Wave argues that the USMS case illustrates a broader challenge: the mismatch between traditional government procurement frameworks and the unique risks associated with digital asset management. Unlike conventional financial instruments, cryptocurrency can be moved instantly, often without intermediaries, making robust fiduciary controls and real-time monitoring essential.
“The government has an obligation to treat digital assets with the same seriousness it applies to other forms of public property,” Wave stated in its submission. “Failure to do so not only jeopardizes taxpayer assets but also undermines confidence in the government’s ability to operate in modern financial markets.”
Call for Reform and Independent Investigation
Wave’s request to the DOJ OIG seeks not only an investigation into specific allegations of asset mismanagement but also a broader review of the USMS’s procurement practices, contractor oversight, and internal control frameworks. The firm argues that only an independent investigation can restore confidence in the integrity of the government’s digital asset management program.
By submitting its complaint to the OIG and the Court of Federal Claims, Wave aims to bring sustained attention to what it describes as systemic vulnerabilities that threaten both government assets and public trust.
The issue is larger than any single contract or procurement dispute,” Wave concluded. “It is about whether the United States government will adopt the standards of accountability, transparency, and fiduciary responsibility that are essential in the digital asset era. Until those standards are fully implemented, the risks exposed by this case will continue to grow.
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