Watchdog group doubles down on Circle-Tron money laundering claims

Nonprofit ethics group Campaign for Accountability (CfA) has doubled down on its money laundering claims against Circle, publishing a new open letter on Dec. 14 claiming that the USDC issuer is facilitating the funding of terrorist organizations.

NEW: This morning, CfA sent a letter to @SenSherrodBrown and @SenWarren highlighting incomplete & misleading information shared by stablecoin-issuer Circle in response to previous concerns that CfA raised about its operations.https://t.co/88urQqriKF

— Campaign for Accountability (@Accountable_Org) December 14, 2023

CfA originally made these claims on Nov. 9 in a letter to U.S. Senators Elizabeth Warren and Sherrod Brown. Circle responded to the claims on Nov. 11, claiming the allegations were based on uncorroborated, unverified social media posts.

The new letter was also addressed to the two U.S. senators and was signed by CfA executive director Michelle Kuppersmith. In the new letter, Kuppersmith took aim at Circle’s Cross Chain Transfer Protocol (CCTP), a blockchain protocol that allows users to transfer USDC (USDC) between multiple networks, including Tron.

“Circle’s recent employment of its Cross-Chain Transfer Protocol may be used to facilitate what appears to be the fastest growing vehicle for illicit finance in the digital asset space,” the letter stated. It claimed that facilitating transfers to Tron is problematic because the network “has been named in multiple law enforcement actions involving billions of dollars in transactions by alleged organized crime groups and sanctioned entities.” Tron founder Justin Sun denied allegations of money laundering in 2019.

Kuppersmith also claimed that Circle has admitted to “banking” Justin Sun. “Rather than addressing the specifics of its relationship with Mr. Sun, [Circle head of public policy] Mr. Disparte wrote merely that Circle no longer ‘banks’ Justin Sun,” the letter said.

Per Kuppersmith, this indicates that “Circle maintained a direct customer relationship with Mr. Sun, something we were not previously aware of.” In Circle’s November 11 rebuttal to the CfA, Disparate stated that “Circle terminated all accounts held by Mr. Sun and his affiliated companies in February 2023.”

The CfA claimed that new evidence has emerged against Tron recently. Quoting Reuters, the letter stated that “Tron has overtaken its rival as a platform for crypto transfers associated with groups designated as terror organizations by Israel, the United States and other countries.” The Reuters article cited “interviews with seven financial crime experts and blockchain investigations specialists” as evidence for this claim.

Aside from the Nov. 11 letter, Circle declined to comment further on the matter when contacted by Cointelegraph.

Claims about crypto terrorism financing have come to the forefront since the Israeli-Hamas war broke out on Oct. 7. In October, blockchain analytics platform Elliptic claimed that Tron’s SunSwap protocol had become one of the most popular means of money laundering for terrorist groups. However, after multiple media outlets began citing the report, Elliptic claimed that these outlets were exaggerating the value of these transactions.