November 9, 2023
VIA EMAIL
The Honorable Sherrod Brown
The Honorable Elizabeth Warren
Committee on Banking, Housing, and Urban Affairs
United States Senate
534 Dirksen Senate Office Building
Washington, DC 20510
Dear Chairman Brown and Senator Warren:
Campaign for Accountability respectfully seeks to alert you to recent information showing
concerns with money laundering in cryptocurrency extend beyond the issues raised in the letteryou and approximately 100 other members of Congress recently sent to the National Security
Advisor and Treasury Undersecretary for Terrorism and Financial Intelligence. 1
Recently published studies and reports of law enforcement operations indicate a prominent USbased cryptocurrency company backed by major Wall Street investment houses may be directly
or indirectly compromised by its integration with an Asia-based network of trading platforms andcryptocurrencies that has been named in multiple international law enforcement actions
involving billions of dollars in transactions by alleged organized crime groups and sanctioned
entities.
The Asian network, revolving around the blockchain system TRON, is headed by Chinese
national Justin Sun,2 who was recently charged – along with a number of celebrities – withmarket manipulation and civil fraud by the Securities and Exchange Commission3 and isreported to be under criminal investigation in the United States. 4 Much of the recent alleged
Letter to The Honorable Brian Nelson, Under Secretary for Terrorism and Financial Intelligence and Jake Sullivan,
National Security Adviser, October 17, 2023, available athttps://www.warren.senate.gov/imo/media/doc/2023.10.17%20Letter%20to%20Treasury%20and%20White%20Hou
se%20re%20Hamas%20crypto%20security.pdf.
2
Sun frequently relies on a Grenada passport. See David Marsanic, Justin Sun Lost Diplomatic Immunity:
Grenadian Media, Daily Coin, March 31, 2023, available athttps://dailycoin.com/justin-sun-lost-diplomaticimmunity-grenadian-media/. Sun also, however, has claimed citizenship in Saint Kitts and Nevis. See Christopher
Harland-Dunaway, The Many Escapes of Justin Sun, The Verge, March 9, 2022, available athttps://www.theverge.com/c/22947663/the-many-escapes-of-justin-sun. Notably, Sun is reportedly participating in a
research project at the Central Party School, which is controlled by the Communist Party of China. See Eliza Gkristi,“Justin Sun Joins Research Project at Communist Party School,” CoinDesk, July 27, 2021, available athttps://www.coindesk.com/markets/2021/07/27/justin-sun-joins-research-project-at-communist-partyschool/?outputType=amp.
3
Complaint, SEC v. Sun, et al., No. 1:23-cv-02433, (SDNY Mar. 22, 2023), available athttps://www.sec.gov/files/litigation/complaints/2023/comp-pr2023-59.pdf.
4
Harland-Dunaway, The Verge, Mar. 9, 2022.
1

611 Pennsylvania Ave., S.E. #337 • Washington, D.C. 20003 • (202) 780-5750
campaignforaccountability.org

Honorable Sherrod Brown
Honorable Elizabeth Warren
November 9, 2023
Page 2 of 7
terrorist funding through digital assets was conducted through wallets on Sun’s TRON network,
which consists of digital currencies and a digital ledger (or blockchain). 5
The TRON Foundation, along with other entities allegedly controlled by Sun, has a historical andongoing relationship with Circle Internet Financial LLC, which issues a dollar-equivalent digitalcurrency known as USDC. Circle issues its USDC on numerous platforms around the world
including the TRON blockchain and almost $400 million of its USDC “stablecoins” are in the
TRON ecosystem. 6 In July of 2023, the National Bureau for Counter Terror Financing of Israel
issued an asset seizure order targeting the terror group Palestinian Islamic Jihad that identified 26
TRON wallets consisting of over $93 million in three cryptocurrencies, Circle’s USDC (issued
on TRON), TRON’s own TRX currency, and another controversial digital dollar coin, Tether.7
In addition, according to the digital currency forensics firm ChainArgos, “Multiple large flow
addresses that have redeemed $USDC for USD (presumably through Circle’s bank accounts)
have also received funds from wallets Israeli intelligence flagged as belonging to Hamas or
Hezbollah.”8The flow of money to suspected terrorist accounts should be a significant concern for Congress
given Circle’s bankers and asset managers on Wall Street. Circle is backed by Goldman Sachs
Group9 and holds some $24.5 billion in reserves10 at Bank of New York Mellon Corp.11 andBlackrock Inc., the latter of which manages most of these funds in an SEC-registered investment
vehicle called the Circle Reserve Fund.12
While Goldman, BNY and Blackrock are all registered with and regulated by multiple federal
and state banking and securities authorities, Circle has either avoided or failed to subject itself to

Arda Akartuna, Israel Orders Seizure of Crypto Wallets Worth $94 Million Linked to Palestinian Islamic Jihad,
Elliptic Blog, July 6, 2023, available at https://www.elliptic.co/blog/analysis/israel-orders-seizure-of-crypto-walletsworth-94-million-linked-to-palestinian-islamic-jihad.
6
Website, Experience the power of TRON USDC, Circle, available at https://www.circle.com/en/usdcmultichain/tron (last visited November 8, 2023).
7
Akartuna, Elliptic Blog, July 6, 2023.
8
ChainArgos Thread, https://twitter.com/ChainArgos/status/1714740987640115440, Oct. 18, 2023. (ChainArgos
chart attached as Exhibit A).
9
Michael J. Casey, Goldman a Lead Investor in Funding Round for Bitcoin Startup Circle, Wall Street Journal, April
29, 2015, available at https://www.wsj.com/articles/goldman-a-lead-investor-in-funding-round-for-bitcoin-startupcircle-1430363042.
10
See Coin Market Cap, available at https://coinmarketcap.com/currencies/usd-coin/ (last visited November 5,2023).
11
Press Release, Circle Selects BNY Mellon to Custody USDC Reserves, Circle Mar. 31, 2022, available athttps://www.circle.com/en/pressroom/circle-selects-bny-mellon-to-custody-usdc-reserves.
12BlackRock Funds, Circle Reserve Fund, SEC Form N-CSR, April 30, 2023, available athttps://www.sec.gov/Archives/edgar/data/844779/000119312523181134/d465752dncsr.htm.
5

Honorable Sherrod Brown
Honorable Elizabeth Warren
November 9, 2023
Page 3 of 7
primary prudential regulation since its founding a decade ago, a concern Campaign for
Accountability flagged to the SEC in May of 2022. 13
Numerous other cryptocurrency firms have voluntarily submitted to primary prudential
regulatory oversight. In New York state, “most of the leading providers of virtual currency
custody in the United States are regulated by the Department as limited purpose trust companies(“LPTCs”) under New York’s banking and virtual currency regulatory regimes,” according to the
New York State Department of Financial Services.14 These include Bakkt, BitGo, Coinbase,
Fidelity, Gemini, GMO-Z, NYDIG, Paxos, and Standard Custody, but not Circle. 15
It is surprising, to say the least, that responsible and regulated financial institutions are doing
business with Circle, a financial company that has some $25 billion in digital currency
circulating around the world, but no primary regulator in either the state in which its
headquartered, Massachusetts, 16 or New York, where most financial institutions are regulated.
It is equally surprising and indeed far more concerning that state regulators, the Federal Reserve,
the Office of Comptroller of Currency, and the SEC have allowed this situation to fester for a
decade. The apparent absence of a primary prudential regulator has enabled Circle to issue its
USDC coin, at will and without regulatory review and approval, on foreign cryptocurrency
networks such as TRON and more than a dozen other like systems that may not meet US
compliance standards for combating illicit finance.17
The listing of USDC on multiple offshore blockchains facilitates “chain hopping,” a techniquethat can facilitate money-laundering and that is not addressed by a new Notice of Proposed
Rulemaking issued by the Financial Crimes Enforcement Network to combat digital money
laundering.18 Circle has recently gone so far as to facilitate such activity with a newly introduced

Press Release, Watchdog Requests SEC Investigate Circle SPAC Merger for Misleading and Deficient Filings,
Campaign for Accountability, May 12, 2022, available at https://campaignforaccountability.org/watchdog-requestssec-investigate-circle-spac-merger-for-misleading-and-deficient-filings/.
14
Peter C. Dean, Counsel New York Department of Finance to Vanessa Countryman, Secretary, Securities andExchange Commission, New York Department of Finance Services Comment Letter for Safeguarding Advisory
Client Assets Proposes Rule [Release No. IA-6240; File No. S7-04-23; RIN 3235-AM32], at 1, March 8, 2023,
available at https://www.sec.gov/comments/s7-04-23/s70423-185879-339982.pdf.
15
Website, Virtual Currency Businesses: Main Page, New York State Department of Financial Services (last visited
November 6, 2023), available at https://www.dfs.ny.gov/virtual_currency_businesses
16
Circle Analyst Brief, CBI Insights, (last visited November 6, 2023) available athttps://www.cbinsights.com/company/circle-internet-financial.
17
See Report on the State of Cross-Chain Crime, Elliptic, p. 5, (October 2023), available athttps://www.elliptic.co/resources/state-of-cross-chain-crime-report.
18
Press Release, FinCEN Proposes New Regulation to Enhance Transparency in Convertible Virtual Currency
Mixing and Combat Terrorist Financing, Department of the Treasury, Financial Enforcement Network,Oct. 19, 2023,
available at https://www.fincen.gov/news/news-releases/fincen-proposes-new-regulation-enhance-transparencyconvertible-virtual-currency. (“FinCen Release”).
13

Honorable Sherrod Brown
Honorable Elizabeth Warren
November 9, 2023
Page 4 of 7
“Cross Chain Protocol” that simplifies, accelerates, and automates the process of moving a
digital asset from one platform to another.19
In October, only six-months after Circle announced this unregulated cross chain protocol, which
the company states “results in USDC essentially "teleporting" from one blockchain to another,”20
the leading blockchain monitoring firm Elliptic issued a report highlighting how cross-chaintransfers like Circle’s new initiative are the fastest growing method of digital asset moneylaundering:
Enforcement actions – such as sanctions and seizures – are increasingly targeting
traditional frontiers of crypto crime, including mixers and non-compliant exchanges. Thisis leading to a “crime displacement” effect where criminals are resorting to cross-chain
crime as an alternative. 21
In one case study cited by Elliptic, a since-indicted hacker who stole over $116 million converted
approximately $30 million from USDC to another system known as DAI using chain-hopping
techniques that allowed the hacker to place the funds beyond the reach of authorities. 22

In addition, one system identified by Elliptic as “the medium where terrorist organizations obtainthe necessary [digital currency]” is called SunSwap, a TRON-based platform for exchanging
Website, Cross Chain Transfer Protocol, Circle,(last visited November 5, 2023), available athttps://www.circle.com/en/cross-chain-transferprotocol#:~:text=Cross%2DChain%20Transfer%20Protocol%20(CCTP)%20is%20a%20permissionless%20on,via%
20native%20burning%20and%20minting
20
Press Release, Circle Delivers USDC Interoperability Across Ecosystems with Mainnet Launch of Cross-Chain
Transfer Protocol, Circle, Apr. 26, 2023, available athttps://www.prnewswire.com/news-releases/circle-delivers-usdc-interoperability-across-ecosystems-with-mainnetlaunch-of-cross-chain-transfer-protocol-301807557.html.
21
Elliptic, Report on the State of Cross-Chain Crime, Elliptic, p. 6, Oct. 2023, available athttps://www.elliptic.co/resources/state-of-cross-chain-crime2023#:~:text=The%20State%20of%20Cross%2Dchain%20Crime%202023&text=As%20criminals%20and%20hack
ers%20shift,chain%20and%20cross%2Dasset%20methods. (“Elliptic 2023 Report”).
22
Id. at 28.
19

Honorable Sherrod Brown
Honorable Elizabeth Warren
November 9, 2023
Page 5 of 7
digital currencies.23 Two of the most widely used dollar-denominated cryptocurrencies, Tether’s
USDT and Circle’s USDC, are traded on SunSwap.24 Elliptic notes that cross-blockchain money
laundering has reached $7 billion and is now “the preferred money laundering method” and is“on track to become the dominant means of laundering cryptoassets.”25
Fincen’s recent proposal to use its Section 311 authority to restrict cryptocurrency “mixing” 26 isworthwhile but may soon be obsolete unless the scope of the regulation is broadened to include
newer methods being adopted by criminal groups such as chain-hopping. We are submitting acomment to Fincen to make this point. 27
Circle has done business with companies controlled by Justin Sun since at least 2019, when Sun
agreed to acquire a troubled Circle unit called Poloniex under investigation by the SEC for
operating an unregistered exchange,28 and the Treasury Department’s Office of Foreign Assets
Control for sanctions violations. 29 Circle began integrating with TRON in July 2021 in an effort
to expand into Asia.30 Sun appears to control a vast stake in Circle’s USDC coins, and in Marchof 2023 transferred $100 million in USDC into another of his systems, Huobi Global. 31
As mentioned above, in March of 2023, the SEC accused Sun of secretly paying celebrities tohype his digital coins and manipulating the price of his coins through “extensive wash trading.” 32
Id. at 19.
Blog, Where to Get Tron USDC: A Guide for USDC TRC20 Via Exchanges, Circle, April 7, 2023, available athttps://www.circle.com/blog/where-to-get-tron-usdc; SunSwap, SunSwap 2.0 Interface Documentation V 1.0.4 at 3,(last visited November 9, 2023). available at https://www.sunswap.com/docs/sunswapV2-interfaces_en.pdf;
CoinMarket Cap, SunSwap V2, (last visited November 9, 2023), available athttps://coinmarketcap.com/exchanges/justswap/.
25
See Elliptic Blog, Cross-chain crime refers to the swapping of cryptoassets between different tokens or
blockchains – often in rapid succession and with no legitimate business purpose – to obfuscate their criminal origin.
Known also as “chain-” or “asset-hopping”, cross-chain crime is on course to become the dominant means oflaundering cryptoassets, Oct. 5, 2023, available at https://www.elliptic.co/blog/7-billion-in-crypto-launderedthrough-cross-chain-services.
26
FinCEN Release.
27
Campaign for Accountability, Comment on Financial Crimes Enforcement Network (Fincen) Notice of Proposed
Rulemaking, Nov. 9, 2023 (attached as Exhibit B).
28
Order Instituting Cease and Desist Proceedings, Securities and Exchange Commission, In the Matter of Poloniex
LLC, Admin File 3-20455, August 9, 2021, available at https://www.sec.gov/litigation/admin/2021/34-92607.pdf
29
David Pan and Anna Baydakova, Despite Denials, Tron Founder Confirms Investment in Poloniex Crypto
Exchange, CoinDesk, Nov. 12, 2019, available at https://www.coindesk.com/markets/2019/11/12/despite-denialstron-founder-confirms-investment-in-poloniex-crypto-exchange/; Press Release, SEC Charges Poloniex forOperating Unregistered Digital Asset Exchange, Securities and Exchange Commission,Aug. 9, 2021, available athttps://www.sec.gov/news/press-release/2021-147.
30
Cheyenne Ligon, Circle Now Supports USDC Stablecoin on Tron, CoinDesk, July 1, 2021, available athttps://www.coindesk.com/business/2021/07/01/circle-now-supports-usdc-stablecoin-on-tron/.
31
Sam Reynolds, Justin Sun Completes $100M USDC Transfer to Create Huobi Liquidity Fund, CoinDesk, March
9, 2023, available at https://www.coindesk.com/markets/2023/03/10/justin-sun-moving-stablecoins-after-promisingto-create-huobi-liquidity-fund/.
32
Press Release, SEC Charges Crypto Entrepreneur Justin Sun and His Companies for Fraud and Other Securities
Law Violations, Securities and Exchange Commission, Mar. 22, 2023, available at https://www.sec.gov/news/pressrelease/2023-59.
23
24

Honorable Sherrod Brown
Honorable Elizabeth Warren
November 9, 2023
Page 6 of 7
As of November 2023, Sun has not responded to the charges in court. There also are reports Sun
is being investigated by the U.S. Attorney for the Southern District of New York. 33 Some ofSun’s former employees have been interviewed by the FBI and IRS and/or have received grandjury subpoenas.34
Further, at least four civil lawsuits have been filed against Sun by former employees.35 One suchcase was filed by Stephen Heinrich, a former Sun accountant who served as Sun’s de facto CFO
until April of 2020 who claims Sun fired him for refusing to assist “illegal or illicit activity”
involving wire transfers that violated accounting rules and federal laws.36 Heinrich alleges Sun
fled to Singapore to avoid service of process in his case and others. 37 Sun has recently obtained
citizenship in several small countries and even, briefly, an ambassadorship, 38 and at one pointclaimed diplomatic immunity from civil proceedings in California on the basis of his
appointment as trade representative to the WTO on behalf of Grenada. 39 (The gambit failed.)
Sun’s critics have labeled his virtual empire “the Theranos of China,” and “an outright fraud.” 40With the conviction of Sam Bankman-Fried and the collapse of FTX, it is evident the lack ofoversight of crypto currencies and trading has proven detrimental to ordinary investors and theHarland-Dunaway, The Verge, Mar. 9, 2022.
Id.
35
See Plaintiff’s Memorandum of Points and Authorities in Support of Plaintiff’s Motion for Order Granting
Plaintiff’s Motion to Effect Service of Process Upon Defendant Justin Sun by Publication (Via Email/Twitter), at 7,
Heinrich v. Rainberry, et al., No, CGC-22-55914, (California Superior Court, San Francisco County, September 19,2023), available athttps://webapps.sftc.org/ci/CaseInfo.dll?SessionID=14625C926ACDA893377874164B0CE18B17D3B4B3&URL=
https%3A%2F%2Fimgquery.sftc.org%2FSha1_newApp%2Fmainpage.aspx%3FWeb_Server%3Dimgquery.sftc.org%26MINDS_Server%3Dhoj-imx01%26Category%3DC%26DocID%3D08734488%26Timestamp%3D20231105105121%26Digest%3D7f16b99120
a84d308a23cb50691cbe276d2fc554 (“Memorandum”).
36Complaint, Heinrich v. Rainberry Inc. et al, No. CGC-22-59914, (California Superior Court, San Francisco
County, filed April 11, 2022), available athttps://webapps.sftc.org/ci/CaseInfo.dll?SessionID=5C6F90882EFEDD222831BB181A323B6FB6070303&URL=h
ttps%3A%2F%2Fimgquery.sftc.org%2FSha1_newApp%2Fmainpage.aspx%3FWeb_Server%3Dimgquery.sftc.org%
26MINDS_Server%3Dhojimx01%26Category%3DC%26DocID%3D08058307%26Timestamp%3D202311050918
24%26Digest%3D4bbac64aff01d7a876cbce3e4b34c6b0498ad460.
37
Heinrich v. Rainberry et al., Memorandum at 5.
38
Ben Weiss, ‘His Excellency’ No Longer: Grenada Sunsets Justin Sun’s Role as WTO Rep After SEC Lawsuit,
Fortune, Mar. 31, 2023, available at https://fortune.com/crypto/2023/03/31/his-excellency-sec-lawsuit-justin-sungrenada-diplomat-wto/.
39
Declaration of William Fitzgerald, at 3, He v Rainberry et al., CGC-21-595792, (Superior Court of CA, San
Francisco County, Nov. 4, 2022, available athttps://webapps.sftc.org/ci/CaseInfo.dll?SessionID=CC0E7A6BBED9AAEF85BBCD6E5E397C90006832C9&UR
L=https%3A%2F%2Fimgquery.sftc.org%2FSha1_newApp%2Fmainpage.aspx%3FWeb_Server%3Dimgquery.sftc.o
rg%26MINDS_Server%3Dhoj-imx01%26Category%3DC%26DocID%3D08322667%26Timestamp%3D20231106084718%26Digest%3Daeb92ba035
e1c8a8b4aa8d4d45921ccf70f9cbfc.
40
Sissi Cao, Warren Buffet’s 28-Year-Old Power Lunch Guest is a Fraud, Say Those Close to Him, The Observer,
July 24, 2019, available at https://observer.com/2019/07/warren-buffett-power-lunch-winner-crypto-justin-sunscam-chinese-media/.
33
34

Honorable Sherrod Brown
Honorable Elizabeth Warren
November 9, 2023
Page 7 of 7
markets. Given the many questions that have been raised about his murky activities by regulatorsand media including The Wall Street Journal,41 it’s reasonable to ask if Sun’s network also may
cause broader harms. And, thanks to their involvement with Circle, which has benefitted from a
regulatory framework slow to catch up to crypto firms that skirt the rules, reputable banking
institutions may find they unwittingly have participated in facilitating criminal organizations
such as Hamas.
CfA respectfully suggests that Congress examine whether U.S. regulatory structures are adequate
to ensure that all American companies engaged in issuing dollar-backed cryptocurrency arecomplying with anti-money laundering requirements, and whether current sanctions regimes andauthorities are sufficient to deter foreign actors from facilitating sanctions evasion by relying on
stablecoins.
Sincerely,

Michelle Kuppersmith
Executive Director
cc: The Honorable Roger MarshallUnited States Senate
The Honorable Patrick McHenryThe Honorable Maxine Waters
The Honorable Sean Casten
United States House of Representatives
Financial Crimes Network Enforcement
Department of the Treasury

Vicky Ge Huang and Alexander Osipovich, Who Controls this Fast Growing Stablecoin?, Wall Street Journal,
August 14, 2023, available at https://www.wsj.com/articles/a-crypto-mystery-who-controls-this-fast-growingstablecoin-895ddc1a; Weilun Soon, Crypto Promoter Justin Sun Draws the Spotlight, this Time from Regulators,
Wall Street Journal, March 23, 2003, available at https://www.wsj.com/articles/crypto-promoter-justin-sun-drawsthe-spotlight-this-time-from-regulators-d45b848.
41

EXHIBIT A

The Circle-Justin Sun Transactions Flagged by ChainArgos

EXHIBIT B

Campaign for Accountability Comment on Financial Crimes Enforcement Network (Fincen)
Notice of Proposed Rulemaking
The Department of Treasury Financial Crimes Enforcement Network’s unprecedented proposal
to use its Section 311 authority to restrict cryptocurrency “mixing” 1 is worthwhile but may soon
be obsolete unless the scope of the regulation is broadened to include newer methods criminalgroups have adopted using virtual currencies. As recently documented by specialists incryptocurrency forensics, suspected terrorists and other criminal actors are now using a newtechnique called “chain hopping” to obscure the sources and destinations of cryptocurrencytransactions.
Section 311 of the USA PATRIOT Act allows the Treasury Department to identify a specificfinancial institution, a jurisdiction, a type of account, or a class of transactions as a “primarymoney laundering concern.”2 Once so designated, the Treasury Department has a menu of
options set out in statute for how to address the “primary money laundering concern,” ranging
from recordkeeping and reporting requirements, to a prohibition on the maintenance ofcorrespondent accounts.3 Treasury’s 311 authority has been used fewer than 30 times in the two
decades since it was adopted, 4 and in all of these cases has been used to target jurisdictions or
specific financial institutions. 5
Last week the Treasury Department used its 311 authority to target a “class of transactions” forthe first time, publishing a proposed rule that would impose recordkeeping and reporting
requirements on cryptocurrency exchanges that engage in transactions with so-called “mixers”.6
In essence, however, this proposal is fighting the last battle as the Department of Justice alreadyprosecutes such conduct. In August 2023, the Department of Justice indicted the founders of
Tornado Cash for sanctions violations and money-laundering in connection with over $1 billion
in transactions in which prosecutors allege funds were deliberately pooled and commingled tohide criminal activity.7
Department of the Treasury, Financial Crimes Enforcement Network Press Release, FinCEN Proposes New
Regulation to Enhance Transparency in Convertible Virtual Currency Mixing and Combat Terrorist Financing,
October 19, 2023, available at https://www.fincen.gov/news/news-releases/fincen-proposes-new-regulationenhance-transparency-convertible-virtual-currency.
2
Department of the Treasury, Fact Sheet: Overview of Section 311 of the USA PATRIOT Act, February 10, 2011,
available at https://home.treasury.gov/news/press-releases/tg1056.
3
Id.
4
Financial Crimes Enforcement Network, Special Measures for Jurisdictions, Financial Institutions, or International
Transactions of Primary Money Laundering Concerns, available at https://www.fincen.gov/resources/statutes-andregulations/311-and-9714-special-measures.
5
Id.
6
Ian Talley and Mengqi Sun, U.S. Targets Crypto Mixers Over Money Laundering Risks, Wall Street Journal,
October 19, 2023, available at https://www.wsj.com/articles/u-s-targets-crypto-mixers-over-money-laundering-riskse431def.
7
U.S. Attorney’s Office for the Southern District of New York, Press Release: Tornado Cash Founders Charged With
Money Laundering and Sanctions Violations, August 23, 2023, available at https://www.justice.gov/usaosdny/pr/tornado-cash-founders-charged-money-laundering-and-sanctions-violations.
1

611 Pennsylvania Ave., S.E. #337 • Washington, D.C. 20003 • (202) 780-5750
campaignforaccountability.org

Department of the Treasury
Financial Crimes Enforcement Network
November 9, 2023
Page 2 of 3
According to a recent report by the forensics firm Elliptic, “existing preferred laundering
methods – such as using the now-sanctioned crypto mixer Tornado Cash – have been renderedineffective by enforcement actions.”8 Unfortunately, the ongoing crackdown has already spurred
sanctions violators and other criminals to adopt a new method known as “cross-chain crime” or“chain-hopping.”“Chain hopping” in the cryptocurrency world is a tactic used to obfuscate the origin anddestination of digital assets (cryptocurrencies) by transferring them between different digitalledgers (blockchains) or cryptocurrency networks.9 Blockchains are transaction histories that
reside on the open internet and are publicly accessible. Chain-hopping obscures the digital trailby shifting funds and currencies among multiple chains. This strategy is employed to make it
more difficult for law enforcement to track illicit financial transactions. 10
In its recent report, “The State of Cross-Chain Crime 2023,” Elliptic estimates that some $7
billion has now been laundered through cross-chain crime.11 “Enforcement actions – such as
sanctions and seizures – are increasingly targeting traditional frontiers of crypto crime, including
mixers and non-compliant exchanges,” the firm reports. “This is leading to a “crime
displacement” effect where criminals are resorting to cross-chain crime as an alternative.”12
One system identified by Elliptic as “the medium where terrorist organizations obtain thenecessary [digital currency]” is SunSwap.13 SunSwap is a platform for exchanging digitalcurrencies controlled by TRON, 14 an Asia-based cryptocurrency system controlled by a Chinese
national named Sun Yuchen, aka Justin Sun, who is currently the subject of a civil fraud andmarket manipulation complaint by the SEC. 15 Sun is reported to have direct ties to theCommunist Party of China. 16

Elliptic Blog, $7 Billion in Crypto Laundered Through Cross-Chain Services, October 5, 2023, available athttps://www.elliptic.co/blog/7-billion-in-crypto-laundered-through-cross-chain-services.
9
Merkle Science, Glossary: Your Guide to Blockchain Terminologies, available athttps://www.merklescience.com/glossary#C-name-section.
10
Elliptic Blog, Oct. 5, 2023.
11
Id.
12
Elliptic, Report on the State of Cross-Chain Crime, p. 6, (October 2023), available athttps://www.elliptic.co/resources/state-of-cross-chain-crime2023#:~:text=The%20State%20of%20Cross%2Dchain%20Crime%202023&text=As%20criminals%20and%20hack
ers%20shift,chain%20and%20cross%2Dasset%20methods (“Elliptic 2023 Report”).
13
Id. at 6.
14
Id. at 19.
15
U.S. Securities and Exchange Commission, Press Release, SEC Charges Crypto Entrepreneur Justin Sun and His
Companies for Fraud and Other Securities Law Violations, March 22, 2023, available athttps://www.sec.gov/news/press-release/2023-59.
16
Eliza Gkristi, Justin Sun Joins Research Project at Communist Party School, CoinDesk, July 27, 2021, available athttps://www.coindesk.com/markets/2021/07/27/justin-sun-joins-research-project-at-communist-partyschool/?outputType=amp.
8

Department of the Treasury
Financial Crimes Enforcement Network
November 9, 2023
Page 3 of 3
Two of the most widely used dollar-denominated cryptocurrencies, Tether’s USDT and Circle’s
USDC, are traded on SunSwap.17 In April of this year, Circle, a US based issuer of dollardenominated cryptocurrency that has no primary prudential regulator, announced the launch of a
new “cross-chain protocol” to facilitate chain hopping between blockchains.18 Given that Circle’s
USDC “stablecoin” was one of the digital currencies publicly identified by the Israeli
government in July 2023 as linked to funding terrorism19 and there is currently $400 million of
USDC on the TRON blockchain,20 these monies are at risk of being employed in “chain
hopping” transactions between the 15 blockchains in which they currently operate with unclear
Anti-Money Laundering (AML) standards.
The Treasury Department should consider the use of 311 authority with respect to protocols thatenable unregulated “chain hopping” on blockchains controlled by Chinese nationals that work
directly with the CCP, such as TRON, and any stablecoins listed on those blockchains as a“primary money laundering concern”.

Circle Blog, Where to Get Tron USDC: A Guide for USDC TRC20 Via Exchanges, April 7, 2023, available athttps://www.circle.com/blog/where-to-get-tron-usdc; SunSwap, “SunSwap 2.0 Interface Documentation,” V 1.0.4 at
3, available at https://www.sunswap.com/docs/sunswapV2-interfaces_en.pdf; CoinMarket Cap, “SunSwap V2”,
available at https://coinmarketcap.com/exchanges/justswap/ (last visited November 7, 2023).
18
Circle Website, Cross-Chain Transfer Protocol: United the Ecosystem, https://www.circle.com/en/cross-chaintransfer-protocol (last visited November 8, 2023).
19
Arda Akartuna, Israel Orders Seizure of Crypto Wallets Worth $94 Million Linked to Palestinian Islamic Jihad,
Elliptic Blog, July 6, 2023, available at https://www.elliptic.co/blog/analysis/israel-orders-seizure-of-crypto-walletsworth-94-million-linked-to-palestinian-islamic-jihad; Israel Ministry of Justice, Money Laundering and Terror
Financing Prohibition Authority, Press Release, Terrorism Financing Public Alert: FIU-Israel Calls All Global
Regulated Entities for Increased Vigilance Towards Terrorism Financing Campaigns in Response to the Ongoing
War and State of Emergency, July 11, 2023, Update August 11, 2023, available athttps://www.gov.il/en/departments/news/new_07_11_23.
20
Circle Website, Experience the Power of TRON USDC, available at https://www.circle.com/en/usdcmultichain/tron (last visited November 8, 2023).
17