U.S. lawmakers are ramping up pressure on the Justice Department to investigate cryptocurrency exchange Binance and stablecoin issuer Tether over allegations of facilitating substantial illicit financing, including funneling funds to terrorist groups such as Hamas. Senator Cynthia M. Lummis and Representative French Hill have written a letter to Attorney General Merrick Garland, urging him to take “decisive action” if the two firms are found to be complicit in illegal activities.
While acknowledging that cryptocurrencies are not inherently evil, Senator Lummis emphasized that it is the “bad actors” who should be held accountable. The letter highlights concerns regarding Binance’s history of ties to illicit financing and its failure to freeze accounts connected to Hamas, which could potentially violate federal laws regarding material support to terrorists. Furthermore, the lawmakers suggest that Binance may be neglecting its anti-money laundering obligations.
Tether, on the other hand, faces its own compliance questions, despite reportedly complying with Israeli authorities’ request to freeze addresses associated with Hamas. The letter underscores the importance of holding “bad actors” responsible for enabling illegal activities and the need for consequences.
The call for investigation aligns with the increasing global scrutiny of cryptocurrencies and their potential role in sanctions evasion and terrorism funding. The investigation by the Justice Department and any subsequent actions could significantly impact policy and enforcement surrounding illicit crypto financing going forward.
The lawmakers, however, stress the importance of distinguishing between companies genuinely seeking compliance and those unlawfully exploiting the technology. While acknowledging the risks associated with the pseudonymity of cryptocurrencies, the letter recognizes that most companies in the industry strive to comply with regulations.
The lawmakers express concerns over the potential negative impacts on lawful innovation if the actions of a few unscrupulous actors cast suspicion on the entire cryptocurrency industry. They argue that painting the entire sector with a broad brush could stifle advancements and legitimate use cases for cryptocurrencies.
According to the letter, Binance, an unregulated exchange based overseas, has a track record of facilitating illicit transactions. Several media reports have linked numerous Binance accounts to Hamas, prompting Israel to allegedly order the closure of over 100 accounts tied to the terrorist organization. The lawmakers contend that Binance continuing to provide accounts to terrorist organizations, despite public knowledge, could potentially constitute material support to terrorists under U.S. law.
U.S. lawmakers are urging the Justice Department to take firm action against Binance and Tether if they are found to be involved in illicit financing. The investigation and subsequent enforcement actions in this case could shape the future of policy and regulations surrounding illicit crypto financing. However, it is crucial to distinguish between compliant companies and those engaging in unlawful activities to avoid unfairly tarnishing the entire cryptocurrency industry.
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