April 29, 2024

Warren and Marshall Send Bipartisan Letter to Biden Admin for Info to Stop Russian Use of Crypto in Evading Sanctions, Fueling Weapons Program

Letter Text (PDF)

Washington, D.C. – Today, U.S. Senators Elizabeth Warren (D-Mass.) and Roger Marshall (R-Kan.) sent a bipartisan letter to Secretary of Defense, Lloyd Austin, Secretary of Treasury, Janet Yellen, Under Secretary for Terrorism and Financial Intelligence, Brian Nelson, National Security Advisor, Jake Sullivan, and FinCEN Director, Andrea Gacki, to relay their concerns about Russia’s use of crypto to evade sanctions and build their war machine, and to push the administration for information on what authorities they need in order to neutralize this threat. 

“We write with heightened concerns about rogue nations’—including Russia, Iran, and North Korea—reliance on cryptocurrency to evade sanctions,” wrote the senators. “The national security threat posed by cryptocurrency requires a commensurate response by our country’s defense community.”

This comes after reporting from the Wall Street Journal that the stablecoin Tether has become “indispensable” to Vladimir Putin’s war machine. Though the Treasury Department sanctioned Russia’s preferred Tether trading platform, Garantex, in April 2022, it is not clear if these actions have stopped the flow of funds through the platform. In the meantime, Russian arms smugglers are paying China millions to produce high-tech weaponry and sustain their invasion of Ukraine, using crypto to side-step our financial sanctions on Russia. 

“Tether has become the cryptocurrency of choice for sanctions evaders and other bad actors,” the senators continued. “Russia is using crypto to move funds and conduct transactions in dark web marketplaces: employing crypto wallets and mixing services that allow sanctioned entities to transfer and hide their wealth, developing a digital ruble that would allow it to conduct foreign trade without converting their currency into dollars, and executing ransomware attacks to recoup revenues lost to sanctions.”

In fact, nearly three-quarters of all global ransomware revenue last year, or more than $400 million in cryptocurrency payments, is estimated to have gone to Russia-affiliated entities.

“Russia’s reliance on crypto is emblematic of a deepening national security threat, which includes Iran's and North Korea’s growing use of crypto,” the senators continued. “Rogue nations like Iran are profiting off AML deficiencies in the crypto ecosystem and using those profits to hurt real people.”

North Korea has also relied on crypto to fund their nuclear weapons program, stealing $1.7 billion in 2022 alone–enough to have funded 56 intercontinental ballistic missile tests, if all of that stolen crypto were funneled into their weapons program.

“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,” concluded the senators. “As terrorists and rogue nations like Russia, North Korea, and Iran increasingly turn to crypto to evade sanctions, our tools to defend these sanctions must evolve with the threat.”

Senator Warren is an outspoken advocate for regulation and oversight of crypto to rein in unchecked illegal activity and protect consumers, the financial system, and national security:

  • In April 2024, at a hearing of the Senate Committee on Banking, Housing, and Urban Affairs, Senator Warren asked Deputy Secretary Adeyemo about gaps in AML rules that allow sanctioned entities like Iran to earn revenue processing crypto transactions, highlighting that validators, middlemen between the payer and receiver in crypto transactions, are not subject to the same AML rules as the traditional banking industry. 

  • In April 2024, Senator Warren wrote to the House Financial Services Committee Chair Patrick McHenry (R-N.C.) and Ranking Member Maxine Waters (D-Calif.) urging them to include strong rules that protect consumers, financial stability, and our national security in any upcoming legislation related to stablecoins. 

  • In December 2023, Senator Warren sent letters to three crypto giants: the Blockchain Association, Coin Center, and Coinbase, asking each about their use of the revolving door to undermine efforts to rein in crypto’s use in terrorist financing.

  • In December 2023, Senator Warren announced an expanded coalition of Senate support for the bipartisan Digital Asset Anti-Money Laundering Act. Senators Raphael Warnock (D-Ga.), Laphonza Butler (D-Calif.), Chris Van Hollen (D-Md.), all members of the Senate Banking, Housing, and Urban Affairs Committee, and Senators John Hickenlooper (D-Colo.) and Ben Ray Luján (D-N.M.) joined the bill as cosponsors. 

  • In December 2023, at a hearing of the Senate Banking, Housing, and Urban Affairs Committee, Senator Warren questioned Big Bank CEOs, who agreed on the need to apply anti-money laundering rules to crypto companies to protect national security. 

  • In October 2023, Senators Warren and Marshall and Representative Sean Casten (D-Ill.) led 102 lawmakers in a bipartisan letter to National Security Advisor Jake Sullivan and Brian Nelson, Under Secretary for Terrorism and Financial Intelligence at the Department of the Treasury raising grave concerns about reports that in the months leading up to their brutal October 7th terrorist attack on Israel, Hamas and Palestinian Islamic Jihad raised millions of dollars via crypto, evading U.S. sanctions to fund their operations.

  • In October 2023, at a hearing of the Senate Armed Services Committee, Senator Warren spoke about the need to crack down threats posed by crypto, noting that half of North Korea’s missile program is paid for through crypto crime.

  • In September 2023, Senators Warren, Roger Marshall (R-Kan.), Joe Manchin (D-W.Va.), and Lindsey Graham (R-S.C.) announced an expanded coalition of Senate support for their bipartisan Digital Asset Anti-Money Laundering Act, announcing 11 new cosponsors of their legislation – Senators Peters, Dick Durbin (D-Ill.), Chair of the Senate Judiciary Committee, Smith, King, Shaheen, Bob Casey (D-Pa.), Blumenthal, Bennet, Cortez Masto, Fetterman, and Whitehouse.

  • In July 2023, Senator Warren, along with Senators Marshall, Manchin, and Graham reintroduced the Digital Asset Anti-Money Laundering Act, legislation that would mitigate the risks that digital assets pose to our national security by closing loopholes and bringing the digital asset ecosystem into greater compliance with the anti-money laundering and countering the financing of terrorism (AML/CFT) frameworks governing the greater financial system.

  • In July 2023, at a hearing, Senator Warren warned about the national security risks of rogue states using crypto to evade sanctions and fund their weapons programs, spying, and cyberattacks – calling out North Korea for stealing over $3 billion in crypto over the past 5 years, and using proceeds to fund its illegal nuclear weapons program,

  • In May 2023, a hearing of the Senate Banking, Housing, and Urban Affairs Committee, Senator Warren called out crypto’s role in fueling the fentanyl crisis and announced she will reintroduce her bipartisan Digital Asset Anti-Money Laundering Act, a bill that would close loopholes in anti-money laundering rules, cutting off drug suppliers and cartels from using crypto to facilitate their illegal business. 

  • In May 2023, at a hearing of the Senate Armed Services Committee, Senator Warren questioned senior intelligence officials about crypto’s threats to national security as the method of choice for countries to evade sanctions and fund weapons programs, support spying, and promote cyber attacks.

  • In February 2023, at a hearing of the Senate Committee on Banking, Housing, and Urban Affairs, Senator Warren raised concerns that key parts of the crypto industry are not subject to the same money laundering laws that cover other financial organizations, allowing financial criminals to use crypto to launder billions. 

  • On December 14, 2022, Senators Warren and Marshall introduced the Digital Asset Anti-Money Laundering Act of 2022, bipartisan legislation that would mitigate the risks that crypto and other digital assets pose to US national security by closing loopholes in the existing anti-money laundering and countering of the financing of terrorism framework and bring the digital asset ecosystem into greater compliance with the rules that govern the rest of the financial system.

  • In September 2022, Senator Warren sent a letter to Treasury Secretary Janet Yellen calling on the Treasury Department and the Financial Stability Oversight Council to build a strong regulatory framework for the crypto market.

  • In March 2022, Senators Warren, Reed, Warner, and Tester introduced the Digital Asset Sanctions Compliance Enhancement Act to ensure that Vladimir Putin and Russian elites don't use digital assets to undermine the international community’s economic sanctions against Russia following its invasion of Ukraine.

  • In March 2022, at a hearing of the Senate Banking, Housing, and Urban Affairs Committee, Senator Warren highlighted the various crypto tools that could make it easier for sanctioned individuals to hide their wealth and lessen the impact of Russian sanctions.

  • In March 2022, at a hearing of the Senate Banking, Housing, and Urban Affairs Committee, Senator Warren warned that crypto may allow Russia to dodge sanctions and urged stronger regulation of the crypto market to ensure that countries, drug traffickers, cyber criminals, and tax cheats can’t evade economic pain.

  • In March 2022, Senators Warren, Warner, Reed, and Brown sent a letter to Treasury Secretary Janet Yellen, asking about the Treasury Department’s plans to enforce sanctions-compliance guidance for the crypto industry to ensure that economic sanctions remain an effective tool for achieving foreign policy goals.

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