Tag: Us Treasury

U.S. Intensifies Sanctions on Hamas, Targeting Crypto Assets

by Blockchain News

Wally Adeyemo, the Deputy Treasury Secretary for the United States, made a recent announcement on further sanctions against Hamas, according to Reuters. These new measures are focused on Hamas’ usage of bitcoin assets. This comes as a direct retaliation to the assault carried out by the Palestinian terrorist organization against Israel a month ago. The purpose of the sanctions, which were coordinated with partners of the United States, is to cut off Hamas’s sources of revenue, especially those ones that include crypto assets.

Specifics of the Sanctions

The United States Treasury has implemented penalties on top Hamas leaders, a crypto exchange operating in Gaza, and people who have been related to Hamas’s financial support. This comprises two Hamas executives as well as six persons who manage the financial portfolio for Hamas across a variety of geographic areas. The sanctions are a part of an attempt to disrupt the income that the organization derives from a portfolio of companies that is worth hundreds of millions of dollars.

The Office of Foreign Assets Control (OFAC) under the United States Department of the Treasury especially targeted the cryptocurrency exchange known as “Buy Cash,” which was located in Gaza and is suspected of having aided in the funding of terrorist operations. In addition to that, Ahmed M. M. Alaqad, the primary operator of Buy Cash, was given a punishment. There is evidence to suggest that Buy Cash was involved in wealth transfers between al Qaeda affiliates and ISIS.

In addition, the action taken by the Treasury Department targeted people such as Musa Muhammad Salim Dudin and Abdelbasit Hamza Elhassan Mohamed Khair, who were reportedly involved in facilitating the movement of cash for Hamas. Other people who are subject to sanctions include Ahmed Sadu Jahleb, Amer Kamal Sharif Alshawa, Aiman Ahmad Al-Duwaik, and Walid Mohammed Mustafa Jadallah. All of these people are believed to have positions in organizations that are controlled by Hamas.

Those sanctioned include Hamas operatives Muhammad Ahmad ‘Abd Al-Dayim Nasrallah and Ayman Nofal, both of whom were recently slain in an Israeli attack.

The Situation

By soliciting donations in bitcoin, Hamas sought to get around restrictions imposed by the United States. However, this endeavor was unsuccessful as a result of the harsh steps that were taken by the United States Treasury to clamp down on operations of this kind. The government of Joe Biden, which is dedicated to imposing further expenses on Hamas and their funding, has placed an emphasis on the need for additional sanctions.

The dedication of the United States Treasury to thwarting the funding of terrorist organizations is reflected in the tightening of sanctions against Hamas, particularly in the field of virtual currencies. This action reflects the rising concern about the use of digital assets in terror funding as well as the proactive strategy taken by the United States government to combat this danger.

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US Treasury Targets Hamas Financial Networks Post-Israel Attack

by Blockchain News

In a decisive response to the recent terrorist attack on Israel, the US Department of the Treasury’s Office of Foreign Assets Control (OFAC) designated ten individuals and entities linked to the Hamas terrorist organization. This action, aimed at crippling the financial structures supporting Hamas, encompasses individuals and operations not only in the Gaza Strip but extends to Sudan, Türkiye, Algeria, and Qatar.

Sanctions Detail

The sanctions zero in on various facets of Hamas’s financial network. Among those designated are individuals managing a clandestine Hamas investment portfolio, a Qatar-based facilitator with close Iranian affiliations, a senior Hamas commander, and a Gaza-based virtual currency exchange along with its operator. These sanctions build on previous actions dating back to May 2022, targeting officials and companies entangled in Hamas’s concealed global investment portfolio. The current designations are emblematic of a broader US strategy to dismantle the revenue streams fueling Hamas’s activities in the West Bank, Gaza, and beyond, closely coordinated with regional allies.

Hamas’s global financial operations, veiled as legitimate businesses, have purportedly amassed revenue in hundreds of millions, with investments spanning several countries including Sudan, Algeria, Türkiye, and the United Arab Emirates. The United States seeks to expose and freeze these assets to curtail Hamas’s ability to finance its operations.

Key Individuals and Entities

Highlighted among those sanctioned are Musa Muhammad Salim Dudin, a West Bank-based Hamas official, and Abdelbasit Hamza Elhassan Mohamed Khair, a Sudan-based financier who managed several companies within Hamas’s investment portfolio. In Türkiye and Algeria, Amer Kamal Sharif Alshawa, Ahmed Sadu Jahleb, Aiman Ahmad Al-Duwaik, and Walid Mohammed Mustafa Jadallah were identified as part of Hamas’s investment network, with various roles in supporting the terrorist organization’s financial infrastructure.

Muhammad Ahmad ‘Abd Al-Dayim Nasrallah and Ayman Nofal, based in Qatar and Gaza respectively, were also designated for their significant roles within Hamas. The actions further extended to Buy Cash Money and Money Transfer Company, a Gaza-based virtual currency exchange, and its owner Ahmed M. M. Alaqad, for their material support to Hamas.

Virtual Currency Concerns

OFAC’s action underscores the evolving challenge posed by virtual currencies in financing terrorism. The seizure of virtual currency wallets linked to Hamas in 2021 by Israel’s National Bureau for Counter Terrorist Financing serves as a precursor to the concerns echoed in these sanctions. The designation of Buy Cash, involved in virtual currency transactions including Bitcoin, highlights a nuanced dimension of terror financing that demands international attention and action.

Sanctions Implications

The ramifications of these sanctions are extensive. They mandate the freezing of all property and interests in the US or under US persons’ control belonging to the designated individuals and entities. Additionally, they underscore the risks financial institutions and other entities might face if found engaging in transactions with the designated persons, thereby reinforcing the robustness and the dynamic enforcement landscape of the US sanctions regime.

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Paolo Ardoino: Tether Ranks 22nd in US Treasury Holdings, Surpassing Mexico, Australia, and Spain

by Blockchain News

Tether, USDT issuer, the leading stablecoin in global circulation, now holds $72.5 billion in U.S. Treasury bills, positioning it as the world’s 22nd largest holder. This development coincides with China’s accelerated divestment from U.S. debt, which has seen a reduction of nearly $481 billion from its peak levels. The contrasting strategies highlight the evolving dynamics of global finance and raise questions about the stability of emerging markets.

Tether’s Growing Exposure to U.S. Treasuries

Paolo Ardoino, CTO of Tether and Bitfinex, announced on September 5, 2023, that Tether’s holdings in U.S. Treasury bills have reached $72.5 billion. (Read Exclusive Article contributed by Tether CTO to Blockchain.News)

This places the stablecoin issuer above sovereign nations like the United Arab Emirates, Mexico, Australia, and Spain in terms of U.S. Treasury holdings.

For many of these communities, USDt is a lifeline to protect themselves and their families from the insane inflation of their national currencies,

Ardoino tweeted.

China’s Accelerating Exit from U.S. Debt

In contrast, China’s ownership of U.S. Treasury debt has seen a significant reduction. According to Wall Street Silver, China’s holdings are down almost $481 billion from peak levels, and the rate of selling is accelerating. “You can see how the line is steepening. China is getting out of U.S. debt and buying Gold instead,” the financial commentary platform noted.

Emerging Markets and Financial Stability

The diverging strategies of Tether and China have elicited mixed reactions. Suraj Chawla of GPU.NET questioned the long-term stability of relying on Tether’s U.S. Treasury holdings as a “financial lifeline” for emerging markets.

Propping up economies on shaky grounds creates a facade of stability, not true resilience,

Chawla stated.

BeastOnChain, a crypto analytics platform, offered a different perspective.

This actually highlights the expansion of emerging markets into the Real World Assets (RWA) and the need for a diversified, borderless approach to help people worldwide engage in these emerging markets,

the platform tweeted.

Implications for Global Finance

The expanding U.S. Treasury portfolio of Tether and China’s accelerated shedding of U.S. debt both highlight evolving trends in international finance. Tether’s role as a financial “lifeline” for emerging markets comes with increased scrutiny regarding the long-term stability of these economies, given its substantial investment in U.S. Treasuries. Conversely, China’s pivot from U.S. debt to gold indicates a strategic realignment of its financial holdings, a move that could have implications for the global economic power structure.

Conclusion

As Tether climbs the ranks of global U.S. Treasury holders, its role in emerging markets becomes increasingly significant. However, questions about the stability of these markets persist. Meanwhile, China’s accelerated exit from U.S. debt could have far-reaching implications for global finance. 

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US Treasury and IRS Propose New Regulations on Digital Asset Reporting

by Blockchain News

The US Department of the Treasury and the Internal Revenue Service (IRS) have jointly issued proposed regulations aimed at enhancing transparency and compliance in the digital asset sector. These regulations are set to mandate brokers to report sales and exchanges of digital assets conducted by their customers.

The proposed regulations encompass various digital asset concerns, notably defining brokers and mandating the reporting of proceeds to the IRS via the newly introduced Form 1099-DA. “These proposed regulations are designed to help end confusion involving digital assets and provide clear information and reporting certainty for taxpayers, tax professionals and others,” commented IRS Commissioner Danny Werfel. He emphasized the importance of ensuring digital assets aren’t utilized to conceal taxable income, especially by high-income individuals.

Starting from Jan. 1, 2025, brokers, which include digital asset trading platforms, payment processors, and certain hosted wallet providers, will be required to report gross proceeds on Form 1099-DA. Additionally, they must provide payee statements to their customers. From Jan. 1, 2026, brokers will also need to report gain or loss and basis information for sales, aiding customers in tax return preparations.

The regulations further stipulate that real estate reporting entities, such as title companies and real estate brokers, must report the disposition of digital assets used as consideration in real estate transactions closing on or after Jan. 1, 2025. They will also need to report the fair market value of digital assets paid to real estate sellers for transactions closing from this date.

These proposals are part of the Biden-Harris Administration’s broader strategy to close the tax gap and ensure uniformity in tax rules, especially concerning digital assets. The nonpartisan Joint Committee on Taxation (JCT) highlighted the importance of third-party income verification in reducing tax evasion, estimating that the Infrastructure Investment and Jobs Act (IIJA) provisions could generate nearly $28 billion over a decade.

Public feedback on these regulations is encouraged, with written comments accepted until Oct. 30, 2023. Public hearings are scheduled for Nov. 7 and Nov. 8, 2023, to accommodate the anticipated volume of responses.

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US Treasury Suggests Easier Oversight for Nonbank Financial Institutions

by Blockchain News

The US Treasury and a number of top financial regulators have suggested new rules to make it easier for the Federal Reserve to designate nonbank financial institutions as systemically important. This move would make it easier for the government to supervise and regulate these institutions. During a recent Financial Stability Oversight Council (FSOC) Council Meeting, Treasury Secretary Janet Yellen expressed concerns over the lack of supervision of nonbank financial institutions and their potential to cause wider financial contagion during periods of distress.

Nonbank financial institutions are entities that provide specific financial services but do not hold a bank license and are not insured by the Federal Deposit Insurance Corporation (FDIC). This includes venture capital firms, crypto companies, and hedge funds. Yellen noted that the existing guidance issued in 2019 created inappropriate hurdles during the designation process for nonbank status for major financial firms, a process that currently takes up to six years.

Yellen added that the new guidance measures would remove these hurdles and streamline the designation process for nonbank status. The new, shorter oversight and designation process will still allow regulators and institutions enough time to communicate and discuss specifics. The new guidance will replace the 2019-era rules with an analysis process where the council determines if “material financial distress at the company or the company’s activities could pose a threat to U.S. financial stability.”

Yellen also referred to the recent collapses of crypto- and tech-friendly banks such as Silvergate Bank, Signature Bank, and Silicon Valley Bank, which caused the worst banking crisis since 2008. She reassured both investors and everyday citizens that the US banking sector remains robust and secure. Yellen warned that the recent banking crisis is a clear example of why greater oversight and emergency provisions should be granted to FSOC and the Federal Reserve.

In rewriting the article, it’s important to note that the US Treasury’s recent proposal to ease oversight of nonbank financial institutions is not an isolated event. Rather, it is part of a larger effort to reform financial regulations in the US. This effort began following the 2008 financial crisis, which exposed weaknesses in the regulatory framework that governed the US financial system.

One of the key pieces of legislation that emerged from this effort was the Dodd-Frank Wall Street Reform and Consumer Protection Act. This act created the FSOC, a council made up of the heads of the major US financial regulatory agencies. The FSOC was charged with identifying and addressing threats to US financial stability, including those posed by nonbank financial institutions.

The 2019-era rules that Yellen referenced were put in place to make it more difficult for the FSOC to designate nonbank financial institutions as systemically important. The designation comes with a number of regulatory requirements, including higher capital buffers and more frequent stress tests. Nonbank financial institutions argued that the rules were overly burdensome and unnecessary.

However, Yellen and other regulators argued that the 2019-era rules created too many hurdles and slowed down the designation process. They also pointed out that nonbank financial institutions were playing an increasingly important role in the US financial system and needed to be subject to greater oversight.

The new guidance proposed by the US Treasury and other regulators seeks to strike a balance between the need for oversight and the concerns of nonbank financial institutions. The guidance would create a more streamlined designation process that still allows for enough time for regulators and institutions to communicate and discuss specifics.

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US Treasury to Increase DeFi Regulation

by Blockchain News

The decentralized finance (DeFi) sector has been booming in recent years, with a plethora of new projects and services popping up every day. However, with its rapid growth comes increased scrutiny from regulators, and the United States Treasury recently conducted a risk assessment of the sector to identify potential risks and areas where it may be lacking in compliance.

According to Assistant Treasury Secretary for Terrorist Financing and Financial Crime Elizabeth Rosenberg, the report found that DeFi was lacking in several ways, particularly in terms of Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT) compliance. She stated that the lack of compliance had allowed scammers, money launderers, and North Korean hackers to benefit from the sector, which is a major concern for the Treasury.

Rosenberg spoke about the report’s findings at a recent event hosted by the Atlantic Council think tank, and she warned that the sector should be prepared for increased regulation in the future. The report was part of the Treasury’s response to U.S. President Joe Biden’s executive order on the responsible development of digital assets, which calls for increased oversight and regulation of the crypto industry.

One of the report’s key findings was that DeFi was not always as decentralized as it claimed to be. Many of the services and persons associated with DeFi services were found to be subject to AML/CFT obligations, meaning they were liable to comply with the Bank Secrecy Act. The report concluded that all DeFi services must comply with the Act, which is a major step towards increased regulation of the sector.

While some in the DeFi community may be concerned about the potential for increased regulation, others see it as a necessary step to ensure the sector’s long-term success. With more oversight and compliance measures in place, investors and users can be assured that they are participating in a safe and secure ecosystem that is less vulnerable to fraud and illicit activities.

Overall, the US Treasury’s risk assessment of DeFi has highlighted the need for increased compliance and regulation in the sector. As the DeFi industry continues to grow and evolve, it will be important for all participants to ensure they are following the necessary AML/CFT guidelines and complying with applicable laws and regulations. By doing so, they can help to create a more secure and sustainable future for the sector.

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US Treasury Fines Bittrex Exchange $29m for Multi-Year Sanctions Violation

by Blockchain News

Washington-based cryptocurrency trading platform, Bittrex Has been fined the sum of $29 million by the United States Treasury Department through the Office of Foreign Assets Control (OFAC) and the Financial Crimes Enforcement Network (FinCEN). 

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The fone, tagged as the single largest levied by the OFAC on a digital currency trading platform, became necessary, considering Bittrex failed to implement adequate compliance programs, thus helping some of its users to evade established sanctions. 

According to the OFAC announcement, the trading platform “failed to prevent persons apparently located in the Crimea region of Ukraine, Cuba, Iran, Sudan, and Syria from using its platform to engage in approximately $263,451,600.13 worth of virtual currency-related transactions between March 2014 and December 2017.”

The regulator noted that preventing these banned users would have been easy if the exchange prevented their registration based on their IP addresses at the point of registration. The FinCEN violation involved failure on the part of the trading platform to institute appropriate Anti-Money Laundering (AML) measures, thus creating a weak channel for the laundering of illicit financial proceeds.

“When virtual currency firms fail to implement effective sanctions compliance controls, including screening customers located in sanctioned jurisdictions, they can become a vehicle for illicit actors that threaten U.S national security,” said OFAC Director Andrea Gacki. “Virtual currency exchanges operating worldwide should understand both who—and where—their customers are. OFAC will continue to hold accountable firms, in the virtual currency industry and elsewhere, whose failure to implement appropriate controls leads to sanctions violations.”

The US Treasury has been more alive towards cryptocurrency service providers all year long, first coming into the limelight in May when it banned crypto mixer, Blender.io and subsequently when it added Tornado Cash to its list. 

While the industry made no fuss about the Blender ban, that of Tornado Cash has been received with so many objections, all of which have spurred industry giants like Coinbase Global Inc to fund targeted lawsuits and advocacy stunts.

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US Treasury Imposes Sanctions on Iranian-Linked Ransomware Gang

by Blockchain News

The United States Treasury Department, through the Office of Foreign Asset Control (OFAC), has updated its sanctions list with new targets focusing on ransomware gangs affiliated with the Iranian military. 

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Specifically, the OFAC sanctions list included as many as ten individuals and two companies affiliating with Iran’s hacking and cybercrime activities. According to the US Treasury, almost all of the individuals sanctioned are known to have defrauded some American entities in the past.

“This IRGC-affiliated group is known to exploit software vulnerabilities in order to carry out their ransomware activities, as well as engage in unauthorized computer access, data exfiltration, and other malicious cyber activities,” Treasury’s announcement said. 

The sanctions meted out also included 7 Bitcoin (BTC) addresses, a move that reinstates the US’s stance against using crypto by the Iranian government.

The United States Treasury Department has come under the radar recently as the regulator has intensified its enforcement actions against crypto-linked cybercriminals. Beginning with the sanctions placed on Blender.io cryptocurrency mixer back in May this year on account that it was linked to the North Korean cybercriminal ring, Lazarus Group.

The Treasury Department also placed Tornado Cash on its sanctions list, claiming that as much as $7 billion has been laundered through the crypto mixer since it was created. The Tornado Cash sanctions have raised a lot of uproars as industry stakeholders faulted the Treasury Department for sanctioning a piece of code, setting an unhealthy precedent for the industry.

The regulator has been dragged to court on this matter, and the major digital currency trading platform, Coinbase Global Inc, is named as one of the entities bankrolling the lawsuit. While this is a very rare antagonism to the powers of the US treasury, the argument is a testament to the solid conviction and solidarity in the crypto ecosystem to protect some of its most ingenious privacy protocols.

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Coinbase Backs Lawsuit against US Treasury over Tornado Cash Sanctions

by Blockchain News

Coinbase, the largest U.S.-based cryptocurrency exchange, is helping organize and pay the costs of a lawsuit against the U.S. Treasury Department over its sanctions on Tornado Cash. This cryptocurrency mixer works on the Ethereum blockchain.

Six individuals, including two Coinbase employees, filed the lawsuit on Thursday, which claims that the Treasury Department overstepped its authority in barring all U.S. citizens from interacting with the privacy tool.

The six plaintiffs are Coinbase employees Tyler Almeida and Nate Welch, former Amazon engineer Joseph Van Loon, Ethereum proponent and angel investor Alex Fisher, GridPlus engineer Kevin Vitale, and Prysmatic Labs co-founder Preston Van Loon.

Coinbase is backing the efforts as well as funding the costs (legal fees) associated with the lawsuit against the Treasury Department over its decision to sanction a program that enabled users to hide their transaction history, increasing privacy on what is otherwise an open and transparent blockchain.

All six plaintiffs stated that in the past, they used Tornado Cash for legitimate purposes and have been financially damaged by the sanctions.

“None of the plaintiffs is a terrorist or a criminal. None support terrorism or illegal activity. None launder money. Each is an American who simply wants to engage in entirely lawful activity in private,” lawyers for the Tornado Cash users said in the complaint, filed in the U.S. District Court for the Western District of Texas.

The lawsuit argues that Treasury overstepped its authority by sanctioning software, rather than a person or an entity. It then claims the department infringed on the plaintiffs’ First Amendment rights by prohibiting them from using a tool that enabled them to exercise their free speech.

The suit asserts that the Treasury Department’s Office of Foreign Assets Control (OFAC) didn’t have the legal right to sanction Tornado Cash, which the lawsuit refers to as “a decentralized, open-source software project that restores some privacy for Ethereum users,” because it (the software) isn’t an entity, person, or organization.

All of the plaintiffs have some Ether (ETH) locked in Tornado Cash that they used for various legal purposes – including giving donations to Ukraine and protecting their private wallets from being traceable to their public online identities. They said now they cannot access their funds because of the OFAC’s sanctions, the suit said.

Besides the Treasury, the plaintiffs are suing Treasury Secretary Janet Yellen and OFAC Director Andrea Gacki.

In an interview, Coinbase general counsel Paul Grewal said the firm has a “unique responsibility to support that cause given our role in the crypto ecosystem.”

Grewal further added: “The Treasury Department has other means at its disposal to target bad actors using the program to cover their digital tracks. We have a ton of respect for the Treasury’s role here, but they, too, must act according to law.”

Early last month, as reported by Blockchain.News, Treasury’s OFAC accused Tornado Cash of laundering over $7 billion of cryptocurrencies since its creation in 2019.

The watchdog sanctioned crypto wallets associated with the crypto mixer and related code known as smart contracts.

According to the regulator, Tornado Cash had become a preferred tool for North Korean hackers and other illicit actors to launder billions of dollars’ worth of digital tokens.

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Tornado Cash Community Fund Signatories Relinquish their Positions

by Blockchain News

The sanctions on the cryptocurrency mixing protocol, Tornado Cash, by the US Treasury Department are causing more internal wranglings for the platform than projected.

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In the latest update, the signatories to the protocol’s community funds have relinquished their role, automatically ceding control of the funds to the Decentralized Autonomous Organization (DAO).

Tornado Cash had a robust and functioning ecosystem before the US regulator’s crackdown. As revealed, the mixer recorded a transaction of about $7 billion through its life cycle, and in 2021, it established a community fund to reward contributors to the protocol.

With the sanctions, the community-elected signatories to this fund decided to part ways with Tornado Cash in a bid not to incur the wrath of the US regulators. As shown by the history on Gnosis Safe, two of the five signatories removed themselves on August 12, one left the DAO on August 13, and the last two signatories dropped the pen on August 14.

With their exit, the community fund is now totally under the control of the protocol’s DAO. Association with Tornado Cash may not bode well for anyone at this time as the fine ranges from $10 million to as much as a jail term of 30 years.

The core developer behind the Tornado Cash protocol, Alexey Pertsev, was arrested by Dutch Authorities a few days ago, showcasing the risk posed to anyone with connections to sanctioned crypto mixer.

In reaction to the news of the exodus by the community elected signatories to the fund, some are optimistic that the departure will grant more powers to the holders of the Tornado Cash native token. 

Even though the Treasury Department sanctioned Blender.io prior to Tornado Cash, the impact of the sanctions on the latter is more resounding, given its close-knit nature with key stakeholders in the broader crypto ecosystem.

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