The world’s largest crypto exchange platform by volume is reportedly being sued in New York by the victims of the October 7th Hamas attack on Israel. According to a new report by ABC News, Binance is being sued by the families of the victims for allegedly providing the terrorist group with a funding mechanism. The […]
The post Binance Exchange Slapped With a Lawsuit in New York by Victims of October 7 Hamas Attack on Israel: Report appeared first on The Daily Hodl.
The Campaign for Accountability released a new open letter criticizing Circle’s Cross Chain Transfer Protocol.
Nonprofit ethics group Campaign for Accountability (CfA) has doubled down on its money laundering claims against Circle, publishing a new open letter on Dec. 14 claiming that the USD Coin (USDC) issuer is facilitating the funding of terrorist organizations.
The CfA originally made these claims on Nov. 9 in a letter to United States Senators Elizabeth Warren and Sherrod Brown. Circle responded to the claims on Nov. 11, claiming the allegations were based on uncorroborated, unverified social media posts.
The new letter was also addressed to the two U.S. senators and was signed by CfA executive director Michelle Kuppersmith. In the new letter, Kuppersmith took aim at Circle’s Cross Chain Transfer Protocol (CCTP), a blockchain protocol that allows users to transfer USDC between multiple networks, including Tron.
Senator Elizabeth Warren isn’t leading the charge on this bill linking crypto transactions to terrorism — it comes from Senators Mitt Romney, Mark Warner, Mike Rounds and Jack Reed.
A bipartisan group of lawmakers in the United States Senate introduced legislation aimed at countering cryptocurrency’s role in financing terrorism, explicitly citing the Oct. 7 attack by Hamas on Israel.
In a Dec. 7 announcement, Senators Mitt Romney, Mark Warner, Mike Rounds, and Jack Reed said they had introduced the Terrorism Financing Prevention Act. The bill would expand U.S. sanctions to include parties funding terrorist organizations with cryptocurrency or fiat. According to Senator Romney, the legislation would allow the U.S. Treasury Department to go after “emerging threats involving digital assets” in the wake of the Oct. 7 attacks as well as actions by the terrorist group Hezbollah.
“It is critical that the Department of the Treasury has the necessary counter-terrorism tools to combat modern threats,” said Senator Rounds. “The Terrorism Financing Prevention Act takes commonsense steps toward rooting out terrorism by sanctioning foreign financial institutions and foreign digital asset companies that assist them in committing these heinous acts.”
According to an open letter published on Circle’s blog, the company has not provided services to Justin Sun since February.
USDC stablecoin issuer Circle has denied claims of illicit financing and ties to Tron founder Justin Sun, according to an open letter accessed from Circle’s blog on Nov.
The post was published on Nov.
In the letter, Disparte claimed that Circle has “recently became aware” of “false” claims being made about it by the “so-called Campaign for Accountability (“CfA”).
Disparte dismissed the allegation that Circle facilitated “major flows of funds to Hamas or Hezbollah,” claiming instead that these accusations are based on uncorroborated, unverified posts to social media.
Disparte also claimed that Circle stopped providing services to Justin Sun in February, 2023, stating:
“Neither Mr. Sun and his affiliated companies in February 2023.”
The open letter from Circle appears to have been sent in response to a Nov. CfA’s letter claimed that Circle has extensive ties to Justin Sun’s Tron Foundation and major Wall Street investors and that Sun’s cross-chain protocol, SunSwap, is often used for money laundering.
Related: WSJ debacle fueled US lawmakers’ ill-informed crusade against crypto
Claims that crypto is being used to finance terrorism have been commonplace since the Israeli-Hamas war broke out on Oct. The media outlet later corrected its story, stating instead that $12 million in crypto “may have been” sent to these organizations.
Reports on crypto funding terrorism and blockchain forensics were confusing, but everyone agreed on the need for collaboration and regulation.
The United States House Financial Services Subcommittee on Digital Assets, Financial Technology and Inclusion received an education in the uses of blockchain technology in a hearing titled “Crypto Crime in Context: Breaking Down the Illicit Activity in Digital Assets” on Nov. 15. The hearing was bipartisan in nature, chair French Hill stated at the outset.
Hill began the meeting by citing an article published by The Wall Street Journal on Oct. 10 on the use of crypto by Hamas for fundraising. The article was corrected on Oct. 27 to reflect more accurately crucial data produced by blockchain analytics firm Elliptic, as Hill also mentioned. He continued:
“Phone and the internet aren’t to be blamed for terror financing, and crypto shouldn’t either.”
In a similar vein, subcommittee ranking member Stephen Lynch stated the hope that “we can put aside some of the preconceived notions some may have.”
The panel of witnesses included representatives of Consensys and Chainalysis, as well as forensic experts and a senior counsel from law firm Hogan Lovells. They spoke about the need for international collaboration and public-private collaboration in stopping the misuse of digital assets, the need for well-crafted legislation and the intricacies of blockchain sleuthing.
Representative Brad Sherman asked Dynamic Securities Analytics president Alison Jimenez for an example of a licit use of a crypto mixer, which she was unable to provide.
Related: Israeli authorities seize crypto from terror organizations, credit new technology
Plenty of other voices wanted to be heard at the same time on this topic. Hill, Representative Tom Emmer, Financial Services Committee Chair Patrick McHenry and Representative Ritchie Torres were lead signers, along with a bipartisan group of 53 more House members, of a letter to U.S. President Joe Biden and Treasury Secretary Janet Yellen on Nov. 15.
The letter requested information on Hamas and Palestinian Islamic Jihad fundraising and the role of cryptocurrency in its efforts. The letter stated:
“It is important to understand the scope of Hamas’s digital assets fundraising campaign in the context of its traditional funding activities.”
It went on to say that traditional fundraising methods “could far exceed” the revenue brought in through crypto, and Congress needs assistance “understanding the size, scope, and duration of Hamas’s digital asset fundraising campaign, as well as accurate information on blocked or forfeited digital assets from terrorist organizations.”
The letter cites the same Wall Street Journal article. On Nov. 12, the WSJ published a second article by the same authors on the use of crypto to funnel money to Hamas.
Also on Nov. 15, the Blockchain Association released an open letter to Hill and other members of the Financial Services Committee. That letter was signed by 40 former members of the U.S. military, intelligence officers and national security professionals who now have links to digital assets companies or venture capital.
#HappeningNow: Chairman @RepFrenchHill convenes the Digital Assets, Financial Technology and Inclusion Subcommittee for a hearing entitled "Crypto Crime in Context: Breaking Down the Illicit Activity in Digital Assets."
— Financial Services GOP (@FinancialCmte) November 15, 2023
Watch Live https://t.co/r2ydRRrWvp pic.twitter.com/Wfrz90FdVR
They also mentioned the earlier WSJ article, saying they were concerned that the “grossly overstated” and “debunked” article “continues to be used to push legislation that would be counterproductive to U.S. national security interests.”
Encouraging the growth of a regulated, compliant digital asset industry in the United States is the best way to root out bad actors, the letter continued.
Magazine: Tornado Cash 2.0: The race to build safe and legal coin mixers
The Campaign for Accountability wanted to let the anti-crypto senators know that the threat of terrorist financing with crypto was worse than they thought.
Nonprofit ethics group Campaign for Accountability (CfA) sent a letter to U.S. Senators Elizabeth Warren and Sherrod Brown on Nov. 9 to present them with information on the alleged use of cryptocurrency in money laundering. The letter discussed the Tron blockchain and stablecoin issuer Circle in particular.
In the letter signed by CfA executive director Michelle Kuppersmith, it is alleged that USD Coin (USDC) issuer Circle has extensive ties to both Justin Sun’s Tron Foundation (TRX) and major Wall Street investors such as Goldman Sachs, Bank of New York Mellon and Blackrock.
Kuppersmith called Circle’s connections to Wall Street “surprising" in light of its supposed lack of regulation and Tron's alleged connections with terrorism financing.
Tron is under investigation by the U.S. Securities and Exchange Commission for unregistered securities sales and has been linked to the alleged financing of the Palestinian Islamic Jihad and possibly Hamas and Hezbollah, the letter outlined. Meanwhile, it claimed that $400 million worth of USDC is in the Tron ecosystem. The letter said:
“Recently published studies and reports of law enforcement operations indicate a prominent US- based cryptocurrency company backed by major Wall Street investment houses [Circle] may be directly or indirectly compromised by its integration with an Asia-based network of trading platforms and cryptocurrencies.”
That network, Tron, “has been named in multiple international law enforcement actions involving billions of dollars in transactions by alleged organized crime groups and sanctioned entities.”
These concerns go beyond the issues raised in the letter the senators, along with over 100 other legislators, sent to the National Security Advisor and Treasury Undersecretary for Terrorism and Financial Intelligence, Kuppersmith added. The letter referred to was sent by the bipartisan group of lawmakers on Oct. 17. Crypto advocacy groups took issue with several of the claims made in that letter.
Furthermore, the letter questions Circle's apparent lack of regulation, and its operation of an “unregulated cross chain protocol.”
"While Goldman, BNY and Blackrock are all registered with and regulated by multiple federal and state banking and securities authorities, Circle has either avoided or failed to subject itself to primary prudential regulation since its founding a decade ago, a concern Campaign for Accountability flagged to the SEC in May of 2022," the letter outlines.
Related: Binance freezes Hamas-linked accounts after Israeli request
On Nov. 10, the CfA also submitted a comment on the Department of Treasury Financial Crimes Enforcement Network’s October proposal to designate crypto mixers as money-laundering hubs.
The proposal “is worthwhile but may soon be obsolete unless the scope of the regulation is broadened to include newer methods criminal groups have adopted using virtual currencies,” the organization said.
Despite being a US company, Circle has either avoided or failed to subject itself to primary or prudential regulation since its founding a decade ago, a concern Campaign for Accountability flagged to the SEC in May of 2022. https://t.co/4s8w98JL8S
— Campaign for Accountability (@Accountable_Org) November 9, 2023
In the comment, the CfA discusses cross-chain protocols and Sun’s SunSwap decentralized exchange protocol, which blockchain forensics firm Elliptic has identified as “the medium where terrorist organizations obtain the necessary [digital currency].”
The organization adds that “Sun is reported to have direct ties to the Communist Party of China,” citing a report that Sun participated in a research project at China’s Central Party School.
Magazine: Justin Sun’s SUI-farming sins, PEPE’s wild run, 3AC’s oyster philosophy: Asia Express
U.S. Senator Cynthia Lummis and Representative French Hill urged the Justice Department to take “swift action” against Binance and Tether over facilitating funds for Hamas.
Cynthia Lummis, a crypto proponent representing Wyoming in the United States Senate, has called on the U.S. Justice Department to consider charges against crypto exchange Binance following the terrorist group Hamas’ attack on Israel.
In an Oct. 26 letter to U.S. Attorney General Merrick Garland, Lummis and Arkansas Representative French Hill urged Justice Department officials to “reach a charging decision on Binance” and “expeditiously conclude” investigations of allegedly illicit activities involving Tether. The two lawmakers’ remarks followed Hamas launching a coordinated attack against Israel on Oct. 7, which they suggested was supported in part by illicit crypto transactions “providing significant terrorism financing.”
“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,” said Lummis and Hill. “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.”
When it comes to illicit finance, crypto is not the enemy - bad actors are.
— Senator Cynthia Lummis (@SenLummis) October 26, 2023
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
The letter by Lummis, a Bitcoiner and supporter of crypto legislation in Congress, and Hill, the chair of the Subcommittee on Digital Assets, Financial Technology and Inclusion, echoed sentiments expressed by Senator Elizabeth Warren and other lawmakers linking crypto payments to terrorist activities. In contrast to Warren, however, the two Republican lawmakers directed the Justice Department to focus on “bad actors” — in this case, including Binance and Tether.
“[W]e must be careful not to paint all crypto asset intermediaries as suspect when a small handful of bad actors use them for nefarious purposes,” said the letter. “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.”
Related: Advocacy groups push back against Sen. Warren linking crypto with terrorism
In the wake of the Oct. 7 attacks, crypto exchange Binance froze accounts linked to Hamas following requests from Israeli law enforcement. However, Lummis and Hill labeled this action as insufficient after the fact, as the exchange allowed terrorist groups to conduct business or was “willfully blind” in doing so. They made similar allegations against Tether for “knowingly facilitating violations of applicable sanctions laws.”
“While some reports claim Binance is now cooperating with Israeli law enforcement, this is immaterial to criminal culpability because Binance is only doing so after knowingly allowing its exchange to be used by terrorist organizations, and only after they have been caught.”
On Oct. 25, blockchain analytics firm Elliptic released a statement directed to U.S. lawmakers and the media saying there was “no evidence” Hamas had received a significant volume of crypto payments to fund its attacks against Israel. Compared to the millions of dollars claimed by other media outlets, Elliptic said one Hamas-linked campaign had raised only $21,000 since the Oct. 7 attack.
Magazine: The Truth Behind Cuba’s Bitcoin Revolution: An on-the-ground report
The government department warned virtual asset service providers and other financial institutions to “identify and report suspicious transactions” related to terrorist groups.
The United States Treasury Department’s Financial Crimes Enforcement Network, or FinCEN, issued an alert for financial institutions as part of efforts to identify “suspicious activity” related to funding terrorist groups.
In an Oct. 20 notice, FinCEN said that the militant group Hamas — behind the Oct. 7 attack on Israel — employed “fundraising campaigns involving virtual currency and fictitious charities raising both fiat and virtual currency” to fund its activities. The government department warned virtual asset service providers and other institutions to “identify and report suspicious transactions” potentially connected to Hamas.
Specifically, FinCEN cautioned financial institutions to be wary of clients who have conducted transactions with a business in a jurisdiction associated with Hamas, entities already on the Office of Foreign Assets Control’s list of Specially Designated Nationals, and those that solicit crypto donations on social media. The announcement came less than 24 hours after the government department proposed designating crypto mixing as an area of “primary money laundering concern” related to terrorism.
Today, Treasury’s Financial Crimes Enforcement Network announced a proposed rule to increase transparency around international Convertible Virtual Currency Mixing to combat its use by malicious actors including Hamas, Palestinian Islamic Jihad, & the DPRK. https://t.co/1atRjZnjwo
— Treasury Department (@USTreasury) October 19, 2023
Related: Crypto Aid Israel raises $185K in 10 days, distributes aid to 4 organizations
FinCEN’s alert followed concerns about crypto voiced by U.S. lawmakers in the wake of Hamas’ attack on Israel. On Oct. 17, more than 100 members of Congress called on the administration of U.S. President Joe Biden to “swiftly and categorically act to meaningfully curtail illicit crypto activity.” U.S. Treasury officials also added a Gaza-based crypto operator allegedly tied to Hamas to its list of sanctioned entities.
In March 2022, FinCEN issued a similar warning to financial institutions over Russian entities’ attempts to evade sanctions using crypto. The notice came days after the Russian military invaded Ukraine in February 2022.
Magazine: US enforcement agencies are turning up the heat on crypto-related crime
The organization is a collective of Israeli Web3 community members and international companies striving to alleviate suffering in the south of Israel.
The Crypto Aid Israel collective has raised over $185,000 since its creation less than two weeks ago and has distributed aid to several humanitarian groups.
The organization has carried out two rounds of aid distribution so far, dispensing around $50,000 (200,000 NIS). Nongovernmental organizations benefitting from its efforts include the Foundation for Advancing Citizens of Eshkol Regional Council, which has provided transportation and shelter to people living close to Gaza.
Zaka has received funds to purchase medical equipment and protective gear for its workers on the front lines.
Related: Crypto donations to surpass $10B in a decade: The Giving Block
Lev Echad by Or Hanegev veHagalil, which normally works with at-risk youth, has received funds for food, hygiene products and clothes for residents of areas adjacent to Gaza who chose to remain in the areas to provide protection and support.
Latet is using funds for a large-scale operation to provide food and hygiene products for people from the south of Israel who remain there or have been relocated. Eyal Gura, crypto and new digital initiatives adviser to Latet, said:
“We believe that while modest initially, the crypto channel is an important, speedy and innovative one and will enable new contributors to join our global ecosystem and support Israel in such an important hour.“
Donations to Crypto Aid Israel can be made to a multisignature wallet via its website. The organization warns people to be cautious when they donate, as phishing attacks have occurred.
Round two!
— CryptoAidIsrael (@CryptoAidIsrael) October 16, 2023
Our Finance Committee has decided on the next allocation of 100k NIS (~$25k):
♂️40k NIS - Eshkol Foundation
♂️40k NIS- @LevEchad
♂️20k NIS- Latet
Watch & share this video to show how #CryptoAidIsrael is helping the brave people of the south rebuild their lives. pic.twitter.com/2SOlPTB7DW
The Crypto Aid Israel initiative was led by the Israeli Web3 community, with companies providing support as well. Global accounting firm KPMG assisted with fundraising and distribution. Zengo, Fuse, Wonderland, Psagot Equity and other companies have contributed to the effort as well.
There has been a renewed push to ensure that crypto is not used for terrorism. Binance has frozen wallets linked to Hamas. The United States Treasury Department's Financial Crimes Enforcement Network has sanctioned a crypto operator in Gaza with ties to Hamas and has proposed a rule to designate cryptocurrency mixing as an area of "primary money laundering concern." Over 100 U.S. lawmakers sent a letter to the Treasury Department enquiring about the use of crypto in financing terrorism on Oct. 17.
Magazine: US enforcement agencies are turning up the heat on crypto-related crime
The Blockchain Association and Crypto Council for Innovation said the terrorist group Hamas had reportedly curtailed using Bitcoin as authorities could more easily track funds.
United States-based crypto advocacy organizations are calling out Senator Elizabeth Warren and other lawmakers for some of the claims made regarding connections between the terrorist group Hamas and financing through cryptocurrency.
On Oct. 17, Sen. Warren and more than 100 lawmakers signed a letter calling for action to “meaningfully curtail illicit crypto activity” used for funding Hamas and the Palestinian Islamic Jihad in the wake of an attack on Israelis. The Massachusetts Senator, a prominent crypto opponent in the U.S. Congress, also penned a Wall Street Journal op-ed with Sen. Roger Marshall on Oct. 18 with claims that “crypto-financed terrorism” endangered U.S. citizens by funding such groups as well as the production of illicit drugs.
Yaya Fanusie, director of anti-money laundering at the Crypto Council for Innovation, said Warren’s proposed solution to some of these issues would not address the problem occurring outside U.S. jurisdictions. Sen. Warren said her bill, the Digital Asset Anti-Money Laundering Act, was aimed at ensuring "that the same rules to protect traditional payment systems from abuse are extended to crypto”.
“They are proposing KYC [Know Your Customer] rules akin to suggesting that copy machine manufacturers would need to KYC anyone using their copiers,” said Fanusie. “[Warren and Marshall] unfortunately fail to understand that the underlying blockchain technology actually makes transactions public, providing investigators a digital paper trail to identify terrorist operatives and their financial contributors.”
The Blockchain Association (BA) responded with similar claims in an Oct. 18 X (formerly Twitter) thread, pointing to reports from April that groups within Hamas stopped using Bitcoin (BTC) for supporting terrorist activities, as authorities could more easily track funds. According to the advocacy group, “only a small fraction of Hamas’s funding has come from crypto” and it was unclear how terrorists benefitted from those funds in the recent attacks on Israel.
“These proposals [Crypto-Asset National Security Enhancement and Enforcement and Digital Asset Anti-Money Laundering Act] will only punish law-abiding U.S.-based users and push all industry actors to other jurisdictions outside the reach of U.S. law enforcement,” said the BA.
1/ Any amount of funding that goes to support terrorist activity – in any form – is too much.
— Blockchain Association (@BlockchainAssn) October 18, 2023
We share many of Sen. Warren’s questions – and we think further examination will reveal the limited and dwindling role that crypto played.https://t.co/jWwHNBe9oH
Sen. Warren’s op-ed as well as sanctions imposed by the U.S. Treasury’s Office of Foreign Assets Control followed an Oct. 7 attack by Hamas that resulted in the deaths of many Israelis. Israel has since declared war on the terrorist organization and began bombarding Gaza, creating a humanitarian crisis for hundreds of thousands of people caught in the crosshairs.
Related: Binance freezes Hamas-linked accounts after Israeli request
Certain U.S. lawmakers, including Sen. Warren, have sometimes pointed fingers at crypto amid an international crisis, such as digital assets being used to evade sanctions on Russia in the wake of the country’s attack on Ukraine. Prior to Hamas’s attack on Israel, Warren was particularly outspoken in cracking down on crypto’s alleged role in production of the drug fentanyl and other illicit purposes.
“Rather than politicizing this issue, [Sens. Warren and Marshall] should look to better support the talented and deeply knowledgeable people across multiple agencies who could use extra resources to help track down bad actors,” said Fanusie. “The U.S. should take proactive steps to make sure that law enforcement and national security officials have the best access to tools, training and expertise, and information that can be used to combat illicit activity, including around crypto.”
At the time of publication, it was unclear if any of Sen. Warren’s suggested bills would be able to move through Congress amid Republican members of the House of Representatives being unable to unite behind voting in a new Speaker. Since Speaker Kevin McCarthy’s position was declared vacant on Oct. 4, pro-crypto lawmaker and House Financial Services Committee chair Patrick McHenry has been acting as interim Speaker.
Magazine: US enforcement agencies are turning up the heat on crypto-related crime
