Allegations of illicit financing and violations of sanctions laws prompt calls for swift action
Recent developments have seen lawmakers in the United States urging the Department of Justice (DOJ) to further investigate and consider charges against cryptocurrency platforms Binance and Tether. The allegations are centered around the potential involvement of these platforms in illicit financing, specifically in supporting terrorism funding.
Republican lawmakers have called on the DOJ to evaluate the extent to which Binance and Tether are providing material support and resources to terrorists. This is suspected to be through violations of applicable sanctions laws and the Bank Secrecy Act. Both Binance and Tether have faced regulatory scrutiny in the past. For instance, the Commodity Futures Trading Commission (CFTC) previously sued Binance for alleged violations of federal laws. Similarly, Tether was fined by the CFTC for its backing of the stablecoin USDT. The lawmakers have urged swift action by the DOJ to choke off funding sources for terrorists targeting Israel.
Lawmakers Cynthia Lummis and French Hill have echoed these sentiments, urging the DOJ to expedite its investigations. They believe it is crucial for the DOJ to hold bad actors accountable if they are found to facilitate illicit activity. Both Lummis and Hill, who have been advocates for reasonable regulation of crypto, argue that Binance and Tether should be held responsible for knowingly allowing their platforms to be used by terrorist organizations. They allege that Tether facilitated violations of sanctions by failing to conduct adequate customer due diligence. As of now, Binance and Tether have not yet responded to the lawmakers' request for comment.
Senator Sherrod Brown, the Chair of the Senate Banking Committee, has also called for a crackdown on the use of cryptocurrency to fund terrorism and evade sanctions. He argues that crypto platforms lack the necessary protections, such as know your customer rules, to prevent illicit finance. Brown's comments come in response to recent controversy over the use of crypto by terrorist group Hamas. While crypto is not the major source of funding for terrorist groups, it can still be exploited by bad actors. Lawmakers are considering measures to address this issue, including a bill proposed by Senator Elizabeth Warren. Brown welcomes ideas from both lawmakers and witnesses to ensure that terrorists and bad actors cannot exploit crypto.
The recent calls from lawmakers for further investigation and potential charges against Binance and Tether highlight the growing concerns around the use of cryptocurrencies for illicit activities. It underscores the need for robust regulations and oversight to ensure that these platforms are not exploited for illegal purposes. The developments also emphasize the importance of customer due diligence and adherence to know your customer rules in the crypto industry.