Lawmakers call for DOJ investigation into Binance, Tether on suspicions of abetting illicit finance

U.S. lawmakers are pressuring the Justice Department to investigate Binance and Tether for allegedly facilitating substantial illicit financing to terrorist groups, including Hamas.

In a letter to Attorney General Merrick Garland, Sen. Cynthia M. Lummis (R-WY) and Rep. French Hill (R-AR) called for “decisive action” if the firms are found complicit.

Senator Lummis wrote on Twitter:

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.

According to the letter, Binance’s history of ties to illicit financing and its failure to freeze accounts linked to Hamas may constitute providing material support to terrorists under federal law. The lawmakers stated that Binance could also be willfully neglecting anti-money laundering diligence requirements.

The letter emphasized that “bad actors” must face consequences if they enable illegal activities. It comes amid rising global scrutiny of cryptocurrencies’ role in potential sanctions evasion and terrorism funding. The Justice Department’s investigation and any resulting actions could shape policy and enforcement around illicit crypto financing going forward.

However, the lawmakers stressed the importance of distinguishing firms seeking compliance from those exploiting the technology unlawfully. While crypto’s pseudonymity risks abuse, most companies aim to comply with regulations, the letter stated. The lawmakers expressed concerns over impacts on lawful innovation if the actions of a few unscrupulous actors cast suspicion on the entire industry.

According to the letter, Binance is an unregulated exchange based overseas that has historically facilitated illicit transactions. After media reports revealed numerous Binance accounts linked to Hamas, Israel reportedly ordered the closure of over 100 more. The lawmakers argued that Binance providing accounts to terrorist organizations, despite public knowledge on the issue, could constitute material support to terrorists under U.S. law.

Tether responded to the news with a statement in which it denied the grounds for the lawmakers’ claims, writing:

“Tether, as a pioneer and leading entity in the stablecoin industry, is uncompromising in its adherence to regulatory compliance and due diligence. Our stringent verification processes, continuous monitoring mechanisms, and collaborative approach with global law enforcement agencies affirm our unyielding commitment to deter and counteract illicit activities. There is simply no evidence that Tether has violated Sanctions laws or the Bank Secrecy Act through inadequate customer due diligence or screening practices.”