Watchdog Asks Senators to Include TRON, Circle in Crypto Terror Financing Probe
FOR IMMEDIATE RELEASE: Nov. 9, 2023
Contact: Michael Clauw, email@example.com, 202.780.5750
WASHINGTON, D.C. – Today, Campaign for Accountability (CfA), a non-profit watchdog group, sent a letter to Senators Sherrod Brown (D-OH) and Elizabeth Warren (D-MA) alerting them to additional facts surrounding crypto firms’ apparent complicity in the financing of terrorism. CfA’s warning follows a letter sent by the senators—co-signed by a bipartisan group of more than 100 lawmakers—asking US national security officials about reports that, in the months leading up to Hamas’s October 7 terrorist attack on Israel, Hamas and Palestinian Islamic Jihad raised millions of dollars through foreign crypto service Binance, evading U.S. sanctions to fund their operations. CfA advised lawmakers to also turn their attention to the role crypto entrepreneur Justin Sun, his blockchain TRON, and the US-based stablecoin issuer Circle may be playing in the financing of terrorist organizations.
CfA Executive Director Michelle Kuppersmith said, “Foreign crypto firms’ role in the financing of terror may not be the full story; a domestic firm, Circle, also appears to have a role. We encourage Congress to ensure all crypto companies, including those here at home, are held accountable.”
In July 2021, Circle announced its USDC stablecoins could be issued on the Asia-based TRON blockchain. Two years later, in July of 2023, the National Bureau for Counter Terror Financing of Israel issued an asset seizure order targeting the terror group Palestinian Islamic Jihad that identified 26 TRON wallets consisting of over $93 million in three cryptocurrencies: Circle’s USDC, TRON’s own TRX currency, and another controversial digital dollar coin, Tether.
Although TRON founder Justin Sun has a history of unscrupulous behavior, he has had business ties with Circle for years. In 2019, Sun agreed to acquire a troubled Circle unit called Poloniex under investigation by the SEC for operating an unregistered exchange. More recently, the SEC accused Sun of secretly paying celebrities to hype his digital coins and manipulating the price of his coins through “extensive wash trading.” There also are reports Sun is being investigated by the U.S. Attorney for the Southern District of New York. Nevertheless, Circle does not appear to have disengaged from Sun’s entities.
In addition to its integration with TRON, Circle’s own technology appears to be exacerbating the involvement of USDC in illicit money laundering. According to blockchain forensics firm Elliptic, the listing of USDC on multiple offshore blockchains facilitates “chain hopping,” a technique that can facilitate money-laundering, and Circle’s newly introduced “Cross Chain Protocol” simplifies, accelerates, and automates the process of moving a digital asset from one platform to another. CfA also sent a comment to the Treasury Department’s Financial Crimes Enforcement Network highlighting this issue.
Despite being a US company—headquartered in Senator Warren’s state of Massachusetts—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. The apparent absence of a primary prudential regulator has enabled Circle to issue its USDC coin, at will and without regulatory review and approval, on foreign cryptocurrency networks such as TRON and more than a dozen other like systems that may not meet US compliance standards for combating illicit finance.
Ms. Kuppersmith continued, “It is surprising, to say the least, that responsible and regulated financial institutions like Goldman Sachs and Blackrock are doing business with Circle. At a minimum, the flow of money to suspected terrorist accounts should be a significant concern for Circle’s investors, bankers, and asset managers on Wall Street.”
Campaign for Accountability is a nonpartisan, nonprofit watchdog organization that uses research, litigation, and aggressive communications to expose misconduct and malfeasance in public life and hold those who act at the expense of the public good accountable for their actions.