Sens. Warren and Marshall pose questions to Biden officials about the use of crypto to evade sanctions
by Sarah Wynn
Crypto Ecosystems • April 30, 2024, 11:25AM EDT
U.S. Senators Elizabeth Warren, D-Mass., and Roger Marshall, R-Kan., probed the Biden administration for more information on what authorities they have to stop the use of crypto to evade sanctions.
The two aired concerns specifically about the stablecoin Tether, in a letter sent over the weekend to Defense Secretary Lloyd Austin, Treasury Secretary Janet Yellen and Under Secretary for Terrorism and Financial Intelligence Brian Nelson, among other officials.
“We write with heightened concerns about rogue nations’—including Russia, Iran, and North Korea—reliance on cryptocurrency to evade sanctions,” Warren and Marshall said. “The national security threat posed by cryptocurrency requires a commensurate response by our country’s defense community.”
Treasury has brought multiple sanctions over the past few years, including against crypto exchange Garantex in April 2022. Last month, Bloomberg reported the U.S. and UK are investigating $20 billion worth of USDT passing through Garantex. That could be the single-largest flouting of sanctions against Russia since the beginning of the Russia-Ukraine war in February 2022, according to Bloomberg’s sources.
“The value of our sanctions is entirely contingent on our ability to enforce them. Garantex’s continued facilitation of Russian arms trading despite Treasury’s 2022 sanctions indicates the insufficiency of regulators’ current anti-money laundering authorities when applied to cryptocurrency,” Warren and Marshall said in the letter, citing Bloomberg’s report.
Warren and Marshall also called tether “cryptocurrency of choice for sanctions evaders and other bad actors,” in their April 28 letter.
USDT is the largest stablecoin by market capitalization, according to data from The Block Research team.
Tether said it “collaborates with more than 120 law enforcement agencies from 40 different countries,” in a statement emailed to The Block.
Questions
Warren and Marshall asked the officials what more authorities they need to stop Tether and other crypto from being traded through Garantex and other sanctioned entities. They also asked how often the agencies met to talk about crypto and national security since the attack on Israel on Oct. 7. They asked for a response by May 17.
Warren and Marshall also notably asked about Treasury’s letter to Congress in November asking for more authority to go after illicit actors in the digital asset industry. Deputy Treasury Secretary Wally Adeyemo called on Congress last year to create a secondary sanctions regime and said “dollar-backed stablecoin providers” that are outside the U.S. should not be able to use U.S. currency without putting in place procedures to block terrorists from taking advantage of their platform.
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