In a recent development, Republican lawmakers, Sen. Cynthia Lummis of Wyoming and Rep. French Hill of Arkansas, have called upon the U.S. Department of Justice (DOJ) to launch an in-depth investigation into Binance and Tether for their potential involvement in supporting illicit financing, particularly with regard to terrorism funding.
The legislators, in a letter addressed to Attorney General Merrick Garland, expressed their concern about the extent to which Binance and Tether might be assisting terrorism funding following recent attacks on Israel. The letter urged the DOJ to carefully evaluate whether Binance and Tether are providing material support and resources that contravene sanctions laws and the Bank Secrecy Act.
Sen. Lummis and Rep. Hill emphasized the importance of swift action to cut off potential funding sources for terrorists targeting Israel. They called on the DOJ to reach a charging decision regarding Binance that corresponds to the level of culpability and to expedite ongoing investigations into illicit activities involving Tether.
Over the last year, both Binance and Tether have come under heightened regulatory scrutiny. Notably, the Commodity Futures Trading Commission (CFTC) took legal action against Binance and its CEO Changpeng “CZ” Zhao, accusing them of breaching federal laws and maintaining insufficient compliance protocols.
Tether was also fined by the CFTC in 2021 for issues related to its stablecoin USDT. Recently, Tether froze 32 addresses controlled by Hamas and Russian-linked entities in Israel and Ukraine, as reported by the Financial Times. The lawmakers pointed out that Tether is allegedly facilitating violations of sanctions laws and the Bank Secrecy Act by not conducting adequate customer due diligence, despite being aware of the misuse of its product for terrorism and illicit activities.
Sen. Lummis and Rep. Hill, who have shown support for cryptocurrency and distributed ledger technology, highlighted that many crypto intermediaries are committed to complying with U.S. sanctions and anti-money laundering regulations as essential to responsible innovation in the crypto space.
As of now, Binance and Tether have not responded to requests for comments regarding these allegations. The future actions of the Department of Justice in response to these calls for investigation will be closely watched by the financial and cryptocurrency industries.
