A bipartisan group of lawmakers, led by Senator Elizabeth Warren, has recently penned a letter addressing the potential implications of cryptocurrency in facilitating terrorism financing. The letter, dated October 17th, was signed by 28 senators and 76 members of the House of Representatives. It was addressed to two prominent figures in the U.S. government, Treasury Under Secretary for Terrorism and Financial Intelligence Brian Nelson and National Security Advisor Jake Sullivan.
In their letter, the lawmakers expressed serious concerns about a news article that claimed Hamas and the Palestinian Islamic Jihad had raised over $130 million in cryptocurrency donations between August 2021 and June 2023. Shockingly, very little of these funds had been recovered. The lawmakers emphasized the significance of these findings, especially in light of recent attacks by Hamas on Israeli civilians, while noting that Hamas had become “one of the most sophisticated crypto users in the terror-finance domain.” This, they argued, underscores the national security threat posed by cryptocurrency, not only to the United States but also to its allies.
As legislative proposals to address crypto-related money laundering and illicit finance risks were being considered by Congress, the lawmakers urged prompt and decisive action to curb illicit crypto activities. They posed nine critical questions to Nelson and Sullivan, seeking clarity on the Biden administration’s knowledge of terrorism funding sources, measures being taken to combat crypto’s role in financing terrorism, and any additional resources required for this endeavor.
Senator Elizabeth Warren has been a prominent critic of cryptocurrency within the U.S. Congress. She introduced the Digital Asset Anti-Money Laundering Act in December, subsequently reintroducing it in the current Congress. Prior to the Israel-Hamas conflict, her bill had garnered support, but the ongoing hostilities have rallied further allies to her cause.
The letter contains signatures from other legislators who have been vocal opponents of cryptocurrency, including Roger Marshall and Sean Casten. Notably, Senate Banking Committee Chair Sherrod Brown, who had previously called for crypto regulation without supporting Warren’s bill, also signed the letter. In contrast, notable crypto advocates such as Cynthia Lummis, Kirsten Gillibrand, and Patrick McHenry did not sign the letter. However, many of the signatories had not previously taken a stance on cryptocurrency. Jake Auchincloss and Josh Gottheimer, who had previously supported pro-crypto policies, also signed the letter, signaling a shift in their positions.
To address the concerns outlined in the letter, the Treasury Department released remarks prepared by Brian Nelson during a Deloitte Anti-Money Laundering conference on October 17th. Nelson highlighted the unique financial resources at the disposal of Hamas and its adept methods for covertly accessing the formal financial system.
He pointed to practices involving secret financial portfolios, shell companies, fake philanthropies, and racketeering. Additionally, he emphasized the Treasury’s close monitoring of how Hamas and the Palestinian Islamic Jihad utilize virtual assets to raise and transfer funds. The Treasury’s Office of Foreign Assets Control further announced sanctions against a “Gaza-based virtual currency exchange and its operator,” along with other individuals associated with Hamas on October 18th, reinforcing the government’s commitment to curbing illicit crypto activities tied to terrorism financing.
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