In a surprising development, Senator Cynthia Lummis and Representative French Hill, popular pro-crypto lawmakers, have urged the U.S. Department of Justice to expedite the investigation against Binance and Tether for illicit financial activities.
Binance, the largest crypto exchange, and Tether, the biggest stablecoin issuer, have been implicated in a scheme for facilitating terrorist financing.
Accusations of Alleged Terrorist Financing
The letter by Senator Lummis comes after some recent reports from the Wall Street Journal alleged that Hamas, Hezbollah, and Palestinian Islamic Jihad have raised over $130 million in crypto.
The lawmaker claims Binance and Tether provide resources to back terrorism, violating sanction laws and the Bank Secrecy Act.
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
This letter suggests that the financial activities for Hamas have been going on over the last two years. The WSJ alleged that Hezbollah, Hamas, and Palestinian Islamic Jihad have earned funding via crypto since August 2021.
Senator Lummis also alleges that Binance has a history of engaging in illicit activities. This letter mentioned a report by Financial Times on Oct. 16, alleging that Israeli watchdogs ordered the closure of 100 Binance accounts connected to Hamas.
It also mentioned an earlier case reported in May when Israeli watchdogs “seized over 190 Binance accounts linked to Islamic terrorism between 2021-23.”
The letter also said,
“The fact that Hamas and other terrorist groups have been permitted by Binance to open accounts and conduct business, even after public reporting about the issue, clearly shows that Binance could be providing material support to entities engaged in terrorism under Federal law, or being willfully blind to the fact that it may be doing so.”
These lawmakers have called for an accelerated verdict to show the extent of the involvement of Tether and Binance in the cases.
Faulty Data Behind Binance Investigation
However, as the Senators call for a speedy investigation into Binance, reports indicate that the information backing the calls is inaccurate. For instance, when writing the original report, WSJ sourced data from Elliptic, a blockchain analysis firm. However, Elliptic just recently rejected the misinterpretation of the data.
Misleading figures will inadvertently drive public policy in the opposite direction. Crypto KOLs have criticized journalists and Senators for lying about crypto terrorism financing.
blockchain data is sufficiently malleable and subjective that you can make it say anything you want. journalists working with on-chain data should know this.
you’re never going to get specific answers from on-chain data. the correct attitude to the data should be hedging and…
— nic 🌠 carter (@nic__carter) October 26, 2023
Binance is already under investigation by regulators and grappling with internal issues, such as staff departures and user withdrawal problems. The SEC has reportedly been considering criminal charges against the firm.
Tether and Binance claim to have cooperated with watchdogs to curb Terrorist financing by banning accounts and even blocking assets.
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