Senator Elizabeth Warren is pressing US authorities for clarity on whether decentralized crypto exchanges are being actively investigated, stepping up her scrutiny of DeFi as crypto legislation stalls in Congress.
In a letter sent Monday to Treasury Secretary Scott Bessent and Attorney General Pam Bondi, the Massachusetts Democrat asked whether federal agencies are probing what she called “significant national security risks” linked to decentralized exchanges such as PancakeSwap. Warren requested a response by Jan. 12, tying the inquiry to ongoing debates over how the crypto sector should be regulated.
Warren flags illicit finance and security concerns
Warren said lawmakers and the public deserve transparency as Congress considers crypto market structure bills, including proposals aimed at curbing illicit finance. Without stronger oversight, she warned, DeFi platforms could be misused by criminals, terrorists, and sanctioned states.
She pointed to warnings from national security experts, as well as concerns raised within the crypto industry itself, arguing that the decentralized nature of these platforms can make enforcement more difficult if guardrails are not in place.
The senator also raised questions about whether political considerations are influencing how crypto laws are enforced. She referenced reports alleging selective enforcement during the Trump administration and highlighted claims tying crypto activity to North Korea’s money-laundering operations.
Crypto legislation slows as scrutiny increases
Warren’s letter comes as momentum around crypto regulation in Washington has cooled. The Senate Banking Committee was widely expected to advance the Responsible Financial Innovation Act this year, but committee chair Tim Scott confirmed this week that the markup has been delayed until 2026.
The letter also cited reports suggesting PancakeSwap had promoted tokens linked to World Liberty Financial, a crypto firm associated with the Trump family. Warren said such connections raise concerns about conflicts of interest and potential political influence over crypto policy, a view shared by several Senate Democrats.
Political backdrop adds tension
The renewed focus on Warren’s crypto stance arrives as political dynamics around digital assets continue to shift. In November, crypto attorney John Deaton, known for representing XRP holders, announced plans to run for the US Senate as a Republican in 2026. Deaton previously challenged Warren and has become a vocal critic of her approach to crypto regulation.
Last month, Warren and Senator Jack Reed separately urged the DOJ and Treasury to investigate World Liberty Financial over alleged links to illicit actors in North Korea and Russia. Those claims were based on a report from watchdog group Accountable.US, which alleged the firm sold tokens to buyers connected to sanctioned entities.
World Liberty Financial has denied all allegations of wrongdoing. The company lists President Donald Trump as a “co-founder emeritus,” with his sons Donald Jr. and Eric named as Web3 ambassadors, and Barron Trump described as a DeFi visionary.
