USDC Stablecoin Issuer Circle Rejects Accusations of Facilitating Illicit Financing

Stablecoin issuer Circle has dismissed false claims of facilitating illicit financing activities. In a letter addressed to US Senators Sherrod Brown and Elizabeth Warren, the company also said it does not provide banking services to Justin Sun, the Tron Foundation, or HTX (formerly known as Huobi Global).

In February 2023, Circle terminated all accounts belonging to Sun and companies associated with him.

“False” Claims of Illicit Financing

In response to a previous letter from the non-profit organization Campaign for Accountability (CfA), Circle’s Chief Strategy Officer and Head of Global Policy, Dante Disparte, issued a rebuttal, asserting that the agency’s communication contained numerous errors, omissions, and misleading information.

Circle clarified that it does not, directly or indirectly, facilitate or finance Hamas or any illicit actors while emphasizing that the company does not provide banking services to Justin Sun. It highlighted its adherence to various regulatory frameworks, including the Bank Secrecy Act (BSA) and laws targeting anti-money laundering and counter-financing of terrorism.

“Circle does not “bank” Justin Sun. Neither Mr. Sun nor any entity owned or controlled by Mr. Sun, including the TRON Foundation or Huobi Global, currently have accounts with Circle. To date, the US government has not specifically designated Mr. Sun or his entities as Specially Designated Nationals. Nonetheless, Circle terminated all accounts held by Mr. Sun and his affiliated companies in February 2023.”

Since last month’s attack by Hamas on Israel, the debate surrounding the potential involvement of crypto entities in supporting terrorist financing has been heavily scrutinized. This prompted the CfA to send a letter to the Senators on November 9th, urging Congress to look into the involvement of both foreign and domestic crypto companies in financing terrorism.

The non-profit watchdog doubled down on Circle and Tron founder’s business ties from the stablecoin issuer’s announcement of USDC on the Tron blockchain in 2021 to the subsequent issuance of an asset seizure order by the National Bureau for Counter Terror Financing of Israel on July 2023 targeting the Palestinian Islamic Jihad, and revealing 26 Tron wallets holding over $93 million in various cryptocurrencies, including USDC.

The letter alleged that Circle and Sun maintained business ties despite the latter’s controversial history, such as accusations of manipulating coin prices. The CfA also claimed that Circle had seemingly unchecked operations and avoided regulatory review and approval, even on foreign cryptocurrency networks that may not meet US compliance standards.

CfA’s Michelle Kuppersmith expressed surprise at reputable financial institutions like Goldman Sachs and BlackRock doing business with Circle, urging investors, bankers, and asset managers to consider the flow of money to suspected terrorist accounts as a significant concern.

Circle Counters Allegations with Assurance of Stringent Oversight

Despite the shocking claims by the CfA, Circle has set the record straight that it is regulated by the Ohio Department of Commerce Division of Financial Institutions as a Money Transmitter, while the Massachusetts Division of Banks recognizes the company as a Foreign Transmittal Agency.

Moreover, Circle holds licenses for Virtual Currency and Money Transmission from the New York Department of Financial Services, along with approvals from 45 other US states and territories.

The stablecoin issuer also stated that its regulatory compliance extends to being recognized as a Money Services Business by FinCEN and adheres to the regulations enforced by OFAC, as well as complying with sanctions imposed by the US, EU, UN, and other relevant regimes.

Besides, Circle is currently looking into the possibility of becoming a publicly traded company in the early months of 2024.