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Circle Denies Funding Hamas Or Banking Justin Sun In Open Letter To Senators

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Circle, the company behind the popular USDC stablecoin, has strongly denied recent accusations that it is tied to terrorist financing or controversial crypto figure Justin Sun. In a letter addressed to U.S. Senators Sherrod Brown and Elizabeth Warren, Circle’s Chief Strategy Officer Dante Disparte dismissed these claims as “false” and intended to damage Circle’s reputation.

Disparte responded to a letter sent to the Senators in November 2023 by the Campaign for Accountability (CfA). The CfA letter alleged that the company has close relationships with Sun and his Tron blockchain platform, which supposedly funded groups like Hamas, Hezbollah, and the Palestinian Islamic Jihad. It also said USDC was among $93 million worth of crypto assets seized by Israel from wallets linked to these terrorist organizations.

Circle Highlights Regulatory Compliance and Cooperation

In his letter, Disparte pointed out that the company cooperates extensively with regulators and law enforcement agencies to combat illicit finance. This includes the Treasury Department’s Office of Foreign Assets Control (OFAC), the Financial Crimes Enforcement Network (FinCEN), and the New York Department of Financial Services (NYDFS).

Disparte also admitted that Circle previously had dealings with Sun but stated this was done legally and Sun is not on the government’s Specially Designated Nationals (SDNs) list. The company has since terminated its relationship with Sun and no longer provides services to him, Tron, or any affiliates.

Denies Involvement In Terrorist Financing

Additionally, Disparte denied that USDC was used by terrorist groups, referring to public blockchain records showing only $160 worth of USDC transfers among the Israel-identified wallets. He stressed that none of those funds originated from Circle and that the company can freeze or revoke tokens it deems illicit.

Disparte closed by expressing Circle’s willingness to work with policymakers on crypto industry regulations. He invited the Senators to meet and discuss these issues while highlighting Circle’s commitment to protecting consumers, investors, and national security.

The strongly worded letter signals that the company is eager to defend itself and USDC against accusations of lax anti-money laundering controls or ties to prohibited entities. However, it remains to be seen whether regulators will open an investigation into Circle and other stablecoin operators in response to the allegations raised.

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Crypto Crackdown: U.S. Rep Casten Unleashes Bold Plan to Tackle Terror Financing

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In light of reports that Hamas, a Palestinian militant group, raised millions of dollars through crypto to fund attacks in Israel, U.S. Representative Sean Casten, a Democrat from Illinois, intends to introduce legislation to strengthen Bank Secrecy Act (BSA) requirements for digital asset transactions.

Casten made this announcement during a hearing before the House Financial Services Committee’s panel on illicit finance and national security. He revealed that the proposed legislation would closely resemble a bill introduced by Senator Elizabeth Warren of Massachusetts. While Casten did not specify the exact bill, Senator Warren reintroduced legislation in July that seeks to curb the misuse of cryptocurrencies for money laundering and sanctions evasion. It also extends BSA requirements to encompass digital asset wallet providers, miners, and other key participants in the crypto ecosystem.

The recent revelations regarding the use of digital assets by terrorist organizations have raised concerns over the security implications of digital assets. A Wall Street Journal report shed light on the fact that Hamas, along with other militant groups, had successfully raised significant funds through digital assets before carrying out attacks in Israel. However, digital asset researcher Elliptic has since pointed out that the scale of these fundraising efforts may have been exaggerated.

Elliptic clarified that the traceability of virtual assets made it possible to track and freeze most of the raised funds. In fact, following the attacks in Israel on October 7, only $21,000 in new crypto donations were reported, with a substantial portion of these funds already frozen. It appears that the unique transparency of digital assets has limited their utility for terrorist financing compared to traditional funding sources.

Maxine Waters’ Crypto Queries at the Hearing

The concern over cryptocurrencies’ role in facilitating illicit activities is not limited to Casten and Warren. Former House Financial Services Committee Chair Maxine Waters also raised questions about the connection between cryptocurrency, Iran, and Hamas during the hearing.

It’s essential to strike a balance in addressing these concerns. While cryptocurrencies hold the potential to democratize finance, stimulate economic growth, and foster financial inclusion, they also present security challenges. The proposed legislation aims to strike that balance by strengthening regulations and oversight without stifling the innovative potential of cryptocurrencies.

In conclusion, as the use of cryptocurrency in illicit activities gains attention, the introduction of legislation to enhance BSA requirements for digital assets becomes a critical step in safeguarding financial systems and national security. It is a response to the evolving landscape of finance, where innovation and security must coexist in harmony.

Massive Crackdown On Hamas-Affiliated Crypto Accounts

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In the wake of Hamas’s recent onslaught, Israeli authorities have ramped up efforts to sever financial ties between the crypto market and the terrorist organization. According to sources familiar with the matter, more than 100 accounts on Binance, the world’s largest crypto exchange, have been taken down since the onset of Hamas’ assault on October 7. Additionally, investigators are seeking information on approximately 200 more crypto accounts, the majority of which are held on the CZ-led exchange.

Binance confirmed that it had “blocked” a “small number” of accounts since the summer in adherence to globally recognized sanctions rules. There has been a longstanding fear of terrorist organizations exploiting thinly regulated crypto markets to launder money. However, the latest attack on Israel and subsequent crypto-based fundraising efforts by Hamas have intensified these concerns.

Hamas
Massive Crackdown On Hamas-Affiliated Crypto Accounts 2

Tom Alexandrovich, executive director at the Israel National Cyber Directorate, stated, “In this period of war, cryptocurrency is a major issue for financing terror because there are no other options.” He also noted a significant increase in crypto funds since the attack began.

The Middle East crisis has sparked debates on illicit financial activities and funding streams. Recently, blockchain-enabled platform Tether announced the freezing of 32 addresses, containing over $873k, suspected of “terrorism and warfare” activities in these disputed areas. This move comes amidst increasing social media posts soliciting donations in cryptocurrencies for Hamas-related organizations. Around 150 donation initiatives affiliated with the militant group have been identified since October 7.

CFTC Accused Binance Of Having Information About Hamas Transactions

Notably, US financial regulators have previously cited connections between money held on Binance and Hamas. A lawsuit filed by the Commodity Futures Trading Commission [CFTC] in March claimed that senior Binance executives had prior knowledge about “Hamas transactions” in 2019. The exchange has vehemently stated its intent to challenge the lawsuit.

Israeli authorities have also assigned a volunteer task force that is actively involved in this effort, significantly bolstering official resources. Over the past two years, the nation has seized millions of shekels in crypto accounts suspected of having links to Hamas and other militant groups in the Middle East.

As global regulators, including the Financial Stability Board, work on frameworks to combat terrorist financing in crypto assets, Israeli officials emphasize the need for vigilance in tracking evolving technologies. “Terrorists are smart, and we need to track them,” stated Alexandrovich, highlighting the challenges posed by digital currencies in combating terror financing.