Elizabeth Warren Targets DEX Over Security Concerns

Source: CryptoTale Original Title: Elizabeth Warren Targets DEX Over Security Concerns Original Link: https://cryptotale.org/elizabeth-warren-targets-dex-over-security-concerns/ Senator Elizabeth Warren warned this week that decentralized exchanges pose national security and political integrity risks, not just consumer threats. Speaking through a formal letter sent Monday from Washington, she urged federal agencies to address alleged laundering tied to North Korea and trading involving a Trump-linked stablecoin. Her request seeks answers by January 12 on oversight gaps, enforcement actions, and conflict concerns.

National Security Focus Shifts to Decentralized Exchanges

Following that warning, Warren sent letters to Treasury Secretary Scott Bessent and Attorney General Pam Bondi outlining her concerns. Notably, she framed decentralized exchanges as channels that hostile actors can exploit without traditional financial controls. The letter asked how current laws address risks tied to DEX activity.

Warren highlighted PancakeSwap, a large decentralized exchange operating across several blockchains, including a major blockchain. According to the letter, blockchain analytics show the platform processed funds linked to North Korea’s Lazarus Group. These funds originated from a major exchange hack earlier this year.

Research from analytics firm Allium and investigations firm TRM Labs supported the claim. According to Allium, roughly $263 million of stolen funds moved through PancakeSwap. That amount represents about 20 percent of the $1.46 billion taken from a major exchange in February.

Warren argued that unchecked DEX activity can enable foreign adversaries to bypass sanctions. She stressed that decentralized platforms often lack know-your-customer and anti-money laundering controls.

However, Warren did not call for banning decentralized finance outright. Instead, she asked whether Treasury and Justice are actively investigating such platforms. She also requested clarification on enforcement tools currently available to federal agencies.

Trump-Linked Stablecoin Adds Political Dimension

Beyond national security, Warren tied her inquiry to political integrity concerns involving World Liberty Financial. The company operates a dollar-backed stablecoin called USD1, which has ties to the Trump family.

According to Warren’s reporting, more than 90 percent of USD1 trading volume occurs on PancakeSwap. In June, the exchange partnered with World Liberty Financial on a liquidity promotion. The campaign offered over $1 million in trading incentives across four weeks.

Warren questioned whether such relationships could influence enforcement decisions. In her letter, she asked whether political considerations affect how agencies approach crypto investigations. She cited reports describing PancakeSwap as promoting Trump-linked tokens to its user base.

Previously, Warren criticized President Donald Trump’s pardon of a major exchange co-founder. She also sought Justice Department clarification on ties between major exchanges and the president. These actions reflect her broader focus on political influence within crypto markets.

Meanwhile, the White House has rejected claims of conflicts of interest. Administration officials have argued that Trump’s crypto connections do not affect enforcement decisions. Despite that stance, Warren continues to press for transparency.

Legislative Pressure and Ongoing Investigations

As this scrutiny unfolds, Congress continues debating crypto market structure legislation. Warren serves as the ranking Democrat on the Senate Banking Committee. That committee must review and approve any bill before a full Senate vote.

However, negotiations have slowed. Committee Chair Tim Scott confirmed that a markup hearing was delayed until January 2026. Some Democrats have joined Republicans in talks, leaving Warren sidelined in portions of the process.

Still, Warren continues raising unresolved issues, particularly regarding DeFi treatment. She criticized platforms that process hundreds of millions daily without user identification. According to her letter, such conditions complicate law enforcement monitoring.

Additional research cited in related reports showed extensive scam activity. A 2025 academic study identified over 384,000 scam-linked wallets on PancakeSwap and certain DEX platforms. Criminals reportedly used token swaps and mixers to obscure fund trails.

Chainalysis’s 2025 Crypto Crime Report further noted growing reliance on decentralized tools. The report described crypto crime as increasingly professionalized. These findings reinforced Warren’s call for security-focused oversight.

Warren’s latest action centers on decentralized exchanges within national security and political oversight debates. By citing PancakeSwap, North Korean laundering, and a Trump-linked stablecoin, she pressed Treasury and Justice for clear enforcement answers. Her request shows the ongoing scrutiny as Congress weighs future crypto regulation.