U.S. Senator Elizabeth Warren Warns of Potential National Security Risks of DEX

On December 17, Decrypt reported that U.S. Senator Elizabeth Warren is warning about national security risks tied to decentralized exchanges (DEXs)—specifically calling out PancakeSwap for its alleged involvement in trading the Trump-linked stablecoin USD1 and handling funds stolen by North Korean hackers. In a letter sent this week to U.S. Treasury Secretary Janet Yellen and Attorney General Merrick Garland, Warren requests a response by January 12 on regulatory loopholes that leave the U.S. vulnerable to DEX-related national security threats, plus steps the agencies are taking (including addressing Trump family conflicts of interest) to curb crypto-related risks. “You and your departments bear significant responsibility to protect the American people and the U.S. financial system,” Warren wrote. “The public deserves to know if you’re investigating the serious risks flagged by national security experts and the crypto industry itself.” Warren cited blockchain reports from analytics firm Allium and investigation firm TRM Labs, which note that DEXs like PancakeSwap and DeFi tools played a role in the $1.4 billion Bybit exchange hack (the largest crypto theft in history) in February. Allium research found ~20% of the stolen funds—$263 million—were laundered through PancakeSwap alone. Beyond North Korean cyberattacks, Warren also highlighted PancakeSwap’s role in USD1 trading. In June, the DEX partnered with WLFI on a liquidity-focused marketing push to boost USD1 trading, doling out over $1 million in rewards in four weeks. Just last week, the Trump-linked stablecoin became a “core part” of Binance’s infrastructure—months after former CEO Changpeng Zhao (CZ) received a pardon. Binance has denied any link between CZ’s pardon and expanded USD1 integration. Warren previously criticized the president’s pardon of CZ and sought answers from the DOJ about the company’s ties to the president. “I’m particularly concerned about improper political influence by the Trump administration on law enforcement decisions,” Warren wrote in this week’s letter.