Circle Denies Allegations that USDC Was Used to Fund Terrorism and Money Laundering

After the United States Department of Treasury caught up with Binance Holdings Ltd, and its former CEO Changpen Zhao (CZ) in a historic settlement, speculation on the next in the regulator’s pipeline has heightened in the past few weeks. Moreover, Binance was nailed on charges of aiding global terrorism and enabling mainstream money laundering. With the Israeli government having identified crypto as crucial funding for the Hamas movement in Palestine, more crackdown is expected in the near future on web3 projects, more so in the stablecoins sector.

Is Circle (USDC) Off the Bait?

On November 9, 2023, the Campaign for Accountability (CfA) sent a formal letter to Senators Sherrod Brown and Elizabeth Warren complaining about how Circle Internet Financial, LLC, a leading stablecoins issuer, has facilitated mass murders through indirect funding of Hamas terror organizations. However, Circle, through its Chief Strategy Officer and head of global policy, Dante Disparte, wrote a response official letter to the same regulators refuting the claims made by CfA.

“Let us be perfectly clear:  Circle does not facilitate, directly or indirectly, or finance Hamas (or any other illicit actors).  Nor does Circle bank Justin Sun,” the letter noted.

Circle reminded the regulators that it has been operating by the law since its inception and is subject to several regulatory regimes. For instance, Disparte highlighted that Circle has money transmitter licenses in more than 45 US states and territories including from the New York Department of Financial Services. Additionally, Circle operates under the stipulated money laws by the FinCEN in order to meet the sanctions requirements. To top it all, Circle reminded the regulators that its employees have a vast background in fighting terrorism in various government departments including the Treasury, CIA, White House, Homeland Security, CFTC, and FDIC among others.

The alarm on Circle (USDC) enabling terrorism originated from a report by the National Bureau for Counter Terror Financing of Israel that identified about $93 million in digital assets under the control of the Palestinian Islamic Jihad (PIJ). Nonetheless, Circle highlighted that only $160 was transferred to USDC, and none was acquired directly from the company. Meanwhile, Circle has informed the regulators that it terminated all the accounts associated with crypto veteran Justin Sun from the Tron (TRX) network.

Market Picture

Amid the mainstream adoption of digital assets and web3 products, Circle (USDC) has grown to a major player with a market capitalization of about $24.5 billion and an average 24-hour trading volume of approximately $8.2 billion. Notably, Circle (USDC) is available on several blockchains including Ethereum, Polygon, Stellar Network, and Solana, among many others.