Circle Faces Fresh Accusations By CFA, CCTP Used For Illicit Finance Through Tron

USDC USDC/USD issuer Circle is under CFA’s scanner again after the latter reaffirmed accusations of illicit financing and raised questions on its linking to Justin Sun.

What Happened: Non-profit ethics watchdog, The Campaign for Accountability (CFA) renewed its accusations on Dec.14 against Circle’s Cross Chain Transfer Protocol (CCTP). It claims that it is “used to facilitate what appears to be the fastest growing vehicle for illicit finance in the digital asset space.”

CFA executive director Michelle Kuppersmith specified the protocol’s support for transfers to the Tron blockchain network. The letter by CFA to Sen. Elizabeth Warren (D-Mass.) and Sherrod Brown (D-Ohio) stated, “Tron has been named in multiple law enforcement actions involving billions of dollars in transactions by alleged organized crime groups and sanctioned entities.”

The accusations were first released by CFA in early November. However, Circle Chief Strategy Officer and Head of Global Policy, Dante Disparte, in his formal letter in early November to the Senators, denied the claims clarifying that the allegations were based on unverified social media posts.  

The letter added that Circle monitors all blockchain activity closely and suspends any access to suspicious counterparties. It has also discontinued all relations with Sun or any affiliated entities.

Also Read: Justin Sun-Backed Crypto Exchange HTX Saw $258M Net Outflow After Hack

Why Does It Matter: CFA concerns include Circle continuing “to offer its USDC stablecoins on Tron and over a dozen other offshore blockchains, none of which it sought or received regulatory approval for.”

Disparte also did not clarify the millions of USDC stablecoins that continue to circulate natively in Sun’s TRON network. It was known from Israeli authorities that 26 TRON wallets consisted of more than $93 million in three cryptocurrencies, including Circle’s USDC.

Disparte could not explain in his letter about Circle’s involvement with TRON and “minimized the $93 million in TRON wallets as insignificant.”

CFA also states that the direct involvement with Sun was never made aware and it was just disclosed that the accounts were closed in February 2023. This makes CFA allege Circle’s lack of transparency.

These allegations come on the heels of market sentiment pointing towards crypto being used as a source of funding for terrorists.

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