Sen. Elizabeth Warren, D-Mass., criticized cryptocurrency’s role in schemes targeting older investors while pushing for her bill that she says would bring scammers to a halt during a recent Senate hearing.
Warren asked a witness testifying at a hearing of the Senate Committee on Aging on Thursday about why crypto is used for scams.
“The anonymity is terrific,” said Steve Weisman, a senior lecturer at Bentley University. “You have people looking for the privacy and of course that is something with crypto mixers where your account gets mixed in with others and becomes very difficult to trace.”
Weisman said in the ransomware attack against Colonial Pipeline, which provides fuel on the U.S. east coast, the government was able to trace the accounts, but said once funds are funneled into mixers, that creates a problem.
“There is a legitimate privacy concern that people may have, but it does not come anywhere near to the scammers,” Weisman continued.
Warren said her bill, called the Digital Asset Anti-Money Laundering Act, would make it easier for regulators to track suspicious activity around crypto and shut down those scammers.
“I think Americans are sick and tired of these crypto crimes, and it’s long past time that we get some regulation in place to deal with this,” Warren said.
Warren’s bill has been at the forefront following a Wall Street Journal story that said Hamas, along with other militant groups, used crypto as a financing tool ahead of attacks in Israel earlier this month. The report cited crypto researcher Elliptic, which later said that the figures used to portray the scale of crypto fundraising by Hamas were being misrepresented. The article garnered criticism from the crypto industry, with key figures arguing crypto played a more limited role and that its traceability deters bad actors.
The crypto industry has also pushed back on Warren’s bill and looked to provide clarifications on crypto’s role in illicit finance.
Yaya Fanusie, director of anti-money laundering and cyber at the Crypto Council for Innovation, an industry group, called the bill, “arbitrary and ill-defined,” when the bill was reintroduced in July because it applies rules on traditional financial firms to anyone who controls a DeFi protocol or develops an application to use the protocol.
A group of digital asset industry companies and entrepreneurs with U.S. military and national security backgrounds sent a letter this week to lawmakers and said they will visit Washington on Nov. 28 to answer questions.
“We are concerned that recent reporting on Hamas’s use of cryptocurrency, which has been grossly overstated, debunked by its source, and partially corrected by its editors, continues to be used to push legislation that would be counterproductive to U.S. national security interests,” they said.
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