Nonprofit ethics group Campaign for Accountability (CfA) sent a letter to U.S. Senators Elizabeth Warren and Sherrod Brown on Nov. 9 to present them with information on the alleged use of cryptocurrency in money laundering. The letter discussed the Tron blockchain and stablecoin issuer Circle in particular.
In the letter signed by CfA executive director Michelle Kuppersmith, it is alleged that USD Coin (USDC) issuer Circle has extensive ties to both Justin Sun’s Tron Foundation (TRX) and major Wall Street investors such as Goldman Sachs, Bank of New York Mellon and Blackrock.
Kuppersmith called Circle’s connections to Wall Street “surprising” in light of its supposed lack of regulation and Tron’s alleged connections with terrorism financing.
Tron is under investigation by the U.S. Securities and Exchange Commission for unregistered securities sales and has been linked to the alleged financing of the Palestinian Islamic Jihad and possibly Hamas and Hezbollah, the letter outlined. Meanwhile, it claimed that $400 million worth of USDC is in the Tron ecosystem. The letter said:
“Recently published studies and reports of law enforcement operations indicate a prominent US- based cryptocurrency company backed by major Wall Street investment houses [Circle] may be directly or indirectly compromised by its integration with an Asia-based network of trading platforms and cryptocurrencies.”
That network, Tron, “has been named in multiple international law enforcement actions involving billions of dollars in transactions by alleged organized crime groups and sanctioned entities.”
These concerns go beyond the issues raised in the letter the senators, along with over 100 other legislators, sent to the National Security Advisor and Treasury Undersecretary for Terrorism and Financial Intelligence, Kuppersmith added. The letter referred to was sent by the bipartisan group of lawmakers on Oct. 17. Crypto advocacy groups took issue with several of the claims made in that letter.
The CfA letter to Sens. Brown and Warren. Source: CfA
Furthermore, the letter questions Circle’s apparent lack of regulation, and its operation of an “unregulated cross chain protocol.”
“While Goldman, BNY and Blackrock are all registered with and regulated by multiple federal and state banking and securities authorities, Circle has either avoided or failed to subject itself to primary prudential regulation since its founding a decade ago, a concern Campaign for Accountability flagged to the SEC in May of 2022,” the letter outlines.
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On Nov. 10, the CfA also submitted a comment on the Department of Treasury Financial Crimes Enforcement Network’s October proposal to designate crypto mixers as money-laundering hubs.
The proposal “is worthwhile but may soon be obsolete unless the scope of the regulation is broadened to include newer methods criminal groups have adopted using virtual currencies,” the organization said.
Despite being a US company, 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. https://t.co/4s8w98JL8S
— Campaign for Accountability (@Accountable_Org) November 9, 2023
In the comment, the CfA discusses cross-chain protocols and Sun’s SunSwap decentralized exchange protocol, which blockchain forensics firm Elliptic has identified as “the medium where terrorist organizations obtain the necessary [digital currency].”
The organization adds that “Sun is reported to have direct ties to the Communist Party of China,” citing a report that Sun participated in a research project at China’s Central Party School.
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