Cynthia Lummis, a crypto proponent representing Wyoming in the United States Senate, has called on the U.S. Justice Department to consider charges against crypto exchange Binance following the terrorist group Hamas’ attack on Israel.
In an Oct. 26 letter to U.S. Attorney General Merrick Garland, Lummis and Arkansas Representative French Hill urged Justice Department officials to “reach a charging decision on Binance” and “expeditiously conclude” investigations of allegedly illicit activities involving Tether. The two lawmakers’ remarks followed Hamas launching a coordinated attack against Israel on Oct. 7, which they suggested was supported in part by illicit crypto transactions “providing significant terrorism financing.”
“We urge the Department of Justice to carefully evaluate the extent to which Binance and Tether are providing material support and resources to support terrorism through violations of applicable sanctions laws and the Bank Secrecy Act,” said Lummis and Hill. “To that end, we strongly support swift action by the Department of Justice against Binance and Tether to choke off sources of funding to the terrorists currently targeting Israel.”
When it comes to illicit finance, crypto is not the enemy – bad actors are.
I sent a letter asking DOJ to finish its investigation and consider criminal charges against Binance and Tether after reports they served as intermediaries for Hamas and engaged in illicit activities. pic.twitter.com/M3KGNFkpWc
The letter by Lummis, a Bitcoiner and supporter of crypto legislation in Congress, and Hill, the chair of the Subcommittee on Digital Assets, Financial Technology and Inclusion, echoed sentiments expressed by Senator Elizabeth Warren and other lawmakers linking crypto payments to terrorist activities. In contrast to Warren, however, the two Republican lawmakers directed the Justice Department to focus on “bad actors” — in this case, including Binance and Tether.
“[W]e must be careful not to paint all crypto asset intermediaries as suspect when a small handful of bad actors use them for nefarious purposes,” said the letter. “Many crypto asset intermediaries seek to comply with U.S. sanctions and money laundering laws, correctly viewing the regulations as necessary to unlock the promise of crypto assets and distributed ledger technology.”
In the wake of the Oct. 7 attacks, crypto exchange Binance froze accounts linked to Hamas following requests from Israeli law enforcement. However, Lummis and Hill labeled this action as insufficient after the fact, as the exchange allowed terrorist groups to conduct business or was “willfully blind” in doing so. They made similar allegations against Tether for “knowingly facilitating violations of applicable sanctions laws.”
“While some reports claim Binance is now cooperating with Israeli law enforcement, this is immaterial to criminal culpability because Binance is only doing so after knowingly allowing its exchange to be used by terrorist organizations, and only after they have been caught.”
On Oct. 25, blockchain analytics firm Elliptic released a statement directed to U.S. lawmakers and the media saying there was “no evidence” Hamas had received a significant volume of crypto payments to fund its attacks against Israel. Compared to the millions of dollars claimed by other media outlets, Elliptic said one Hamas-linked campaign had raised only $21,000 since the Oct. 7 attack.
Arizona’s Senate has advanced a Bitcoin reserve bill, bringing it to second place behind Utah in a race between US states to get a crypto investment bill approved.
The Arizona Senate passed the Strategic Digital Assets Reserve bill (SB 1373) on its third reading on Feb. 27 with a vote of 17 for and 12 against. It now advances to the state’s House.
The bill, sponsored by Republican Senator Mark Finchem, would create a “Digital Assets Strategic Reserve Fund” administered by the state treasurer that would consist of money appropriated by the legislature and crypto seized by the state.
The treasurer can’t invest more than 10% of the total fund deposits in any fiscal year but may loan digital assets from the fund to generate returns if it doesn’t increase financial risks to the state.
“[Whether] you like it or not, legislation will happen at the federal level in this order: Stablecoins, Market Structure, and Strategic Bitcoin Reserve,” Satoshi Action Fund founder Dennis Porter said in a Feb. 28 X post.
Arizona moves up in the strategic reserve race. Source: Bitcoin Laws
Another Bitcoin reserve bill is also making its way through Arizona’s Senate. The Strategic Bitcoin Reserve Act (SB 1025), co-sponsored by Republican Senator Wendy Rogers and Representative Jeff Weninger, also passed the Senate’s third reading on Feb. 27 with a vote of 17 for and 11 against.
The Rogers and Weninger-sponsored bill focuses on investment authority for public funds to invest in crypto assets, while the Finchem-sponsored bill establishes a specialized fund for seized digital assets and appropriated funds.
There are currently 18 US states that have crypto reserve bills pending Senate votes, while two — Arizona and Utah — are in the final stages of the approval process.
State crypto investment bills have been rejected in Montana, Wyoming, North Dakota, South Dakota and Pennsylvania.
Bitcoin reserve proposals are gaining support across the US thanks to President Donald Trump’s pro-crypto policies.
Bitcoin, meanwhile, has tanked 17% over the past seven days as it struggles to keep gains due to economic uncertainty over Trump’s sweeping incoming tariffs.
The US Securities and Exchange Commission, under former chair Gary Gensler, used settlements to pressure founders of decentralized finance platforms from ever working in the industry again, according to venture capital firm Founders Fund partner Joey Krug.
“The thing people don’t really know about is that the government, in many cases, went to founders of DeFi protocols […] and basically told the founders you effectively have to do a settlement with us,” Krug said on stage at the ETHDenver conference on Feb. 27.
“In many cases, they said you also have to sign a thing that says you will never work in crypto again,” he added. “By the way, this agreement, you can’t really talk about it publicly because there’s a non-disparagement clause.”
Krug’s claim adds to a crypto industry rumor dubbed “Operation Chokepoint 2.0” that says the Biden administration tried to kill the local industry through regulators’ enforcement actions and by pressuring banks to cut off or limit services to crypto firms.
“These agencies would basically go to the founders, and they would say, ‘Hey, if you don’t agree to this, you’re just going to end up in jail.’”
Krug said such civil agencies would have to defer to the Department of Justice for it to file criminal charges, but “none of these matters have been referred to the DOJ yet.” He also claimed that “none of these founders actually broke the law.”
Krug said that at first, he “didn’t really believe” such settlements existed, but some founders — who he didn’t name — later showed him their agreements.
Joey Krug (left) on stage with Axios’ Brady Dale (right) at ETHDenver 2025. Source: Turner Wright/Cointelegraph
“Sure enough, there are clauses that say you can never work in crypto again [and] you can’t talk about this to anyone,” he said.
“It was just a crazy, crazy administrative state that got really out of control.”
The SEC did not immediately respond to a request for comment.
Since 1972, the SEC has included a “gag rule” in its settlements that forbids defendants from criticizing the agency’s claims — a clause that Commissioner Hester Peirce has said “undermines regulatory integrity.”
Krug said the only way DeFi founders could comment on the settlements is if Congress asked them to testify. He added there are “a lot of founders who would love to talk about how the government basically really screwed them over if Congress asked them to testify.”
Earlier this month, the bank-regulating Federal Deposit Insurance Corporation released nearly 800 pages of so-called “pause letters” that it sent banks and finance firms over their crypto services.
Both the US House and Senate held hearings on crypto debanking in early February that heard from crypto executives on their claimed torrid dealings with trying to access financial services under the Biden administration.
The US Securities and Exchange Commission says it does not view memecoins as securities but warned any fraudulent tokens could still be subject to enforcement actions by other regulators.
The agency’s Division of Corporation Finance said in a Feb. 27 statement that, in its view, memecoins “do not involve the offer and sale of securities under the federal securities laws” and “are akin to collectibles.”
“As such, persons who participate in the offer and sale of meme coins do not need to register their transactions with the Commission,” the SEC said.
It added that memecoin buyers and holders wouldn’t be protected by US securities laws but said the fraudulent offer and sale of memecoins “may be subject to enforcement action or prosecution by other federal or state agencies.”
The SEC added it shared its views “as part of an effort to provide greater clarity on the application of the federal securities laws to crypto assets.”
US President Donald Trump has moved to cull the SEC’s regulatory oversight of the crypto space, looking to make good on one of his campaign promises. The agency launched a Crypto Task Force last month to create a framework for digital assets.
Trump and first lady Melania Trump themselves had launched memecoins just days before they entered the White House on Jan. 20, which sparked criticism from many crypto commentators and some of Trump’s supporters.
Donald Trump’s memecoin, Official Trump (TRUMP), is down nearly 83% from its peak, while Melania Trump’s token, Melania Meme (MELANIA), is down 93.5% from its high, accordingto CoinGecko.
The TRUMP memecoin hit a peak of $73.43 a day before Trump assumed office but is now trading at around $12.66. Source: CoinGecko
The SEC’s statement comes after ABC News reported the same day that US House Democrats are set to introduce a bill banning public officials, including presidents, from being able to issue, sponsor or endorse any security, commodity or digital asset, including memecoins.
In its statement, the SEC said that memecoins “typically have limited or no use or functionality” and “tend to experience significant market price volatility.”
It added a memecoin doesn’t fit with “any of the common financial instruments specifically enumerated in the definition of ‘security’” — such as stocks or bonds — as they don’t give a yield or rights to “future income, profits, or assets of a business.”
The SEC said a memecoin doesn’t fit under the definition of an “investment contract” under the securities-defining Howey test — defined as money invested in a common enterprise, such as a business, where investors have an expectation of profiting from the efforts of others.
“The offer and sale of meme coins does not involve an investment in an enterprise nor is it undertaken with a reasonable expectation of profits to be derived from the entrepreneurial or managerial efforts of others,” the agency said.
“In other words, a meme coin is not itself a security.”
The SEC added that its statement doesn’t apply to memecoins inconsistent with its description of one, or any products labeled as a memecoin in a bid to hide from securities laws “by disguising a product that otherwise would constitute a security.”
“The Division will evaluate the economic realities of the particular transaction,” it said.
SEC Commissioner Hester Peirce, who is leading the agency’s Crypto Task Force, said earlier this month that many memecoins “probably do not have a home in the SEC under our current set of regulations.”