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‘Let’s get after Binance and Tether,’ pro-crypto Senator Lummis urges DOJ

‘Let’s get after Binance and Tether,’ pro-crypto Senator Lummis urges DOJ
Senator Lummis wants the DOJ to press criminal charges against Binance and Tether. Credit: Suzanne Cordeiro/Shutterstock
  • Senator Cynthia Lummis and Representative French Hill are calling on the DOJ to wrap up their investigations into Binance and Tether and press criminal charges.
  • The two companies are facilitating the evasion of sanctions, as well as the financing of terrorist groups such as Hamas, their joint letter said.
  • However, experts said during a Senate Banking Committee hearing on Thursday that crypto was only a “very small part of the puzzle” in terms of terrorist financing.

Republican Senator Cynthia Lummis is urging the Department of Justice to wrap up its investigations of Binance and Tether and press criminal charges against them, she wrote in a letter on Thursday.

The letter, co-signed by Republican Representative French Hill, said the two companies had facilitated sanctions evasions, as well as the financing of terrorist groups such as Hamas.

“We urge the Department of Justice to carefully evaluate the extent to which Binance and Tether are providing material support and resources to support terrorism through violations of applicable sanctions laws and the Bank Secrecy Act,” the letter said.

“We know that Hamas and other terrorist groups have on literally hundreds of occasions been able to open accounts with Binance even after public reporting about the issue,” Lummis said in front of the Senate Banking Committee today.

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“It is also well-known that Tether is a favoured on- and off-ramp for illicit activities to interact with crypto asset markets, and is knowingly facilitating violations of the law,” she added.

Lummis is one of crypto’s staunchest allies on the Hill. She’s the co-author of the Lummis-Gillibrand Responsible Financial Innovation Act, a 300-page bill aimed at providing a comprehensive regulatory framework to the crypto industry.

Binance is the world’s largest crypto exchange. Registered in the Cayman Islands, the platform says it processed $3.2 trillion in trading volume in the third financial quarter of the year.

The Securities and Exchange Commission and Commodity Futures Trading Commission have sued Binance and its CEO, Changpeng Zhao, for multiple violations of securities and commodities laws. The DOJ has reportedly been looking into filing criminal charges against Binance as well.

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Binance filed a motion to dismiss the CFTC’s lawsuit on Monday, arguing that the regulator was attempting to gain “worldwide regulatory reach” through its lawsuit.

Tether is the largest stablecoin issuer. Its stablecoin, USDT, is a cryptocurrency designed to stay at par with the US dollar. There are currently over $83 billion USDT tokens on the market, according to CoinGecko.

“Let’s get after Binance and Tether,” said Lummis. “We’ve got to prevent Hamas, Hezbollah, and other terrorist organisations from using digital assets, using cryptocurrency as a means to finance their activities.”

Combating illicit finance

Lummis’ remarks in front of the Senate Banking Committee took place during a full committee hearing on the subject of terrorist financing.

“Crypto is currently a very small part of the puzzle” for terrorist financing, said Dr. Shlomit Wagman, former director-general of the Israel Money Laundering and Terrorism Financing Prohibition Authority.

In the case of Hamas, “most of the funds are still being transferred by the traditional channels,” Wagman said, including banks, money transmitters, payment systems, money exchanges, trade-based terrorism financing, charity, cash, and shell companies.

“Hamas has been able to raise funds through multiple means over a long period of time,” concurred Dr. Matthew Levitt, director of the Reinhard Program on Counterterrorism and Intelligence at the Washington Institute for Near East Policy.

Levitt identified three major sources of income for Hamas: control of territory, funding from Iran, and abuse of charity.

“Crypto is an important way of raising funds through crowdfunding, but it’s an even more important thing in terms of how they move money,” said Levitt.

A group of 100 members of Congress led by Democratic Senator Elizabeth Warren and Republican Senator Roger Marshall, recently wrote to the Biden Administration expressing their “grave concerns” about Hamas’ crypto funding.

They cited an October 10 Wall Street Journal report that a Hamas affiliate, Palestinian Islamic Jihad, raised “as much as” $93 million in crypto between August 2021 and June 2023.

However, blockchain forensics company Elliptic, on whose information the report was based, said on Wednesday that its data had been “misinterpreted” and that the amount raised was likely much smaller than $93 million.

While “the WSJ figure is probably exaggerated,” said Levitt, “there’s no question we’ve seen DOJ action targeting Hamas crypto.”

“We need to try and get ahead — or maybe catch-up — on crypto and DeFi and recognize this is a space where legitimate transactions can happen and illegitimate actions can happen,” Levitt added.

Tom Carreras is a Markets Correspondent at DL News. Got a tip about Binance? Reach out at tcarreras@dlnews.com.