Lawmakers Ask DOJ to Investigate Binance and Tether for Terrorism FInancing

Lawmakers in the U.S have called on the Department of Justice to investigate crypto exchange Binance and issuer of USDT stablecoin, Tether to ascertain their involvement with terrorism.

This call comes following the terrorist attack on Israel a few weeks ago. In a letter to the DOJ on Thursday Republican lawmakers Sen. Cynthia Lummis, R-Wyo., and Rep. French Hill, R-Ark., asked the Justice Department in a letter on Thursday 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.” 

“To that end, we strongly support swift action by the Department of Justice against Binance and Tether to choke off sources of funding to the terrorists currently targeting Israel,” the lawmakers wrote.

The letter further asked Attorney General Merrick Garland to “to reach a charging decision on Binance that reflects their level of culpability and expeditiously conclude your investigations into the ongoing illicit activities involving Tether.”

Regulators Tackle Binance and Tether

Both Binance and Tether have been under the scrutiny of regulators in the U.S for years. The securities and exchange commission sued Binance in June this year on allegations that the exchange failed to register as a security exchange and also for allowing the trading of securities.

Similarly, CFTC filed a lawsuit against Binance shortly after the SEC suit, claiming that the exchange was violating federal laws and was indifferent towards compliance. 

The CFTC also fined Tether in 2021 concerning the backing of its stablecoin, USDT. The CFTC claimed at the time that Tether falsely claimed that USDT was fully backed by U.S Dollars saying that Tether made “untrue or misleading statements and omission of material fact” related to its stablecoin, USDT and fined the company $41 million.

“It is well-known that Tether is knowingly facilitating violations of applicable sanctions laws and the Bank Secrecy Act by failing to conduct adequate customer due diligence and screenings despite being aware that its product is used to facilitate terrorism and other illicit activities,” Lummis and Hill said. 

Both lawmakers however praised crypto and distributed ledger technology, stating in the letter that they can “drive responsible innovation.”

“Many crypto asset intermediaries seek to comply with U.S. sanctions and money laundering laws, correctly viewing the regulations as necessary to unlock the promise of crypto assets and distributed ledger technology,” they said. 

Tether and Binance Role in Fighting Hamas

The attack on Israel has led to a renewed commitment by U.S. regulators to fight the use of crypto for terrorism financing. Lawmakers have since expressed concern over the fact that Hamas and other sister terrorist organizations had raised funds in crypto weeks before the attack.

However, both Tether and Binance have played roles towards containing Hamas’ use of crypto. Binance reportedly helped the Israeli police to freeze multiple accounts associated with the terrorist organization shortly after the attack. 

Tether has also reportedly frozen 32 addresses controlled by Hamas and Russian-linked entities in Israel and Ukraine.

It seems the lawmakers suspect the two companies of involvement in terrorism financing because of the addresses they host which are linked to the terrorist organizations. Meanwhile, the U.S lawmakers are still pushing for crypto regulation in the country.

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