U.S. Senator Elizabeth Warren has asked the Treasury Department and the Department of Justice to explain how they are addressing national security risks linked to decentralized cryptocurrency exchanges. In a letter sent on December 15, 2025, Warren raised concerns that platforms such as PancakeSwap may be facilitating money laundering and sanctions evasion. The inquiry comes as Congress debates new legislation to reshape U.S. crypto regulation.
Warren, the ranking Democrat on the Senate Banking Committee, addressed the letter to Treasury Secretary Scott Bessent and Attorney General Pamela Bondi. She requested detailed information on whether federal agencies are investigating decentralized exchanges, known as DEXs, and whether existing laws are sufficient to mitigate the risks they pose.
According to the letter, Warren is particularly concerned about reports that PancakeSwap has been used to move funds tied to large-scale cybercrime. She cited public reporting that North Korean-linked hacking groups have relied on decentralized finance platforms to launder stolen crypto assets and obscure their origin.
Focus on AML and Political Influence
A central issue raised is the absence of know-your-customer and anti-money-laundering controls on many decentralized exchanges. Warren argued that the ability to swap tokens without identity checks creates a gap in enforcement that criminal networks can exploit. She warned that these weaknesses could undermine U.S. sanctions policy and broader national security objectives.
The letter also touches on potential political sensitivities. Warren asked whether enforcement decisions involving PancakeSwap could be influenced by its reported role in trading a token linked to World Liberty Financial, a crypto venture associated with the Trump family. She noted that a large share of trading volume for the token has been concentrated on PancakeSwap, raising questions about regulatory neutrality.
Beyond specific platforms, Warren framed the issue within the broader debate over crypto market structure legislation now under discussion in Congress. She argued that lawmakers should fully understand how decentralized finance is being used by hostile actors before approving reforms that could weaken oversight or constrain regulators’ authority.
The senator asked Treasury and the Justice Department to outline any identified national security threats, gaps in statutory authority, and planned enforcement actions. She requested a formal response by January 12, 2026.
The inquiry is likely to intensify scrutiny of DeFi platforms at a critical moment for U.S. crypto policy. As regulators weigh how to balance innovation with security, the outcome could influence whether decentralized exchanges face tighter obligations similar to those imposed on centralized crypto firms.