Today, as the U.S. Department of Justice (DOJ) evaluates possible criminal charges against Binance and Tether, two prominent U.S. lawmakers are emphasizing the urgency of the matter. U.S. Senator Cynthia Lummis (R-Wy.) and Representative French Hill (R-Ark.) dispatched a letter to Attorney General Merrick Garland, insisting that the DOJ swiftly conclude its investigations into the two companies.
At the core of the issue is the potential role of these cryptocurrency platforms in crypto funded terrorism, specifically in facilitating financial transactions for Hamas.
U.S. Lawmakers’ Stand on Crypto Regulation
The letter from Lummis and Hill
urges the DOJ to take decisive action on Binance and Tether‘s potential involvement in crypto funded terrorism.
When it comes to illicit finance, crypto is not the enemy – bad actors are.
I sent a letter asking DOJ to finish its investigation and consider criminal charges against Binance and Tether after reports they served as intermediaries for Hamas and engaged in illicit activities. pic.twitter.com/M3KGNFkpWc
— Senator Cynthia Lummis (@SenLummis) October 26, 2023
Both lawmakers have a history of advocating for measured regulation of cryptocurrencies. Lummis is an active member of the Senate Banking Committee and has previously drafted crypto-related legislation. Meanwhile, Hill chairs the Subcommittee on Digital Assets in the House Financial Services Committee.
The Question of Complicity
The lawmakers allege that Binance and Tether may have been complicit in violations of sanctions by neglecting due diligence procedures. Hill and Lummis were explicit in stating that Binance’s current cooperation should not alleviate criminal culpability.
Data used to describe the scale of Hamas’s cryptocurrency fundraising is exaggerated, with Hamas receiving only $21,000 in new cryptocurrency donations since October 7, most of which has been frozen, according to research firm Elliptic. Earlier, both Tether and Binance stated…
— Wu Blockchain (@WuBlockchain) October 26, 2023
According to them, Binance is cooperating only after having knowingly enabled its platform to be used by terrorist organizations. Tether, they claim, similarly failed to perform adequate customer screening, even while aware that its services were being used to fund Hamas and other groups.
Ramifications Beyond the Conflict
The issue transcends the immediate situation involving the Hamas-Israel conflict. Decisions by the DOJ could set important precedents for crypto regulation and its relation to international disputes.
The lawmakers’ intervention also adds to the complex narrative of how crypto assets like Bitcoin can be weaponized financially.
In their letter, the lawmakers pointed out that while some reports contest the scale of crypto funding as reported by the Wall Street Journal on October 10, the essential issue is not the amount but the act itself.
“However, we believe it is nonetheless imperative that the Department of Justice hold bad actors accountable if they are shown to facilitate illicit activity,” they wrote.
Coinbase Institutional head of institutional research David Duong suggested that the matter has already been partially priced into the markets, indicating that the financial sector is awaiting the DOJ’s decision with bated breath.
Given that other financial services are also under scrutiny for their roles in crypto funded terrorism linked to the conflict between Hamas and Israel, the outcome could serve as a bellwether for broader crypto regulation.