Senator Elizabeth Warren Raises Concerns Over Decentralized Exchanges
Senator Elizabeth Warren has voiced significant concerns regarding the potential security threats posed by decentralized exchanges (DEXs), specifically highlighting PancakeSwap in a recent letter. The Massachusetts lawmaker reached out to Treasury Secretary Scott Bessent and Attorney General Pamela Bondi, urging them to provide clarity on these risks and the measures being taken to address them by January 12.
National Security Risks Linked to PancakeSwap
Warren is sounding the alarm about the national security implications tied to DEXs, particularly PancakeSwap, due to its alleged connections to the trading of a stablecoin associated with former President Trump and funds believed to have been stolen by North Korean hackers. In her correspondence, she raised questions regarding the regulatory oversights that leave the U.S. susceptible to such risks, especially in relation to crypto-related conflicts of interest involving the Trump family.
Call for Transparency and Action
In her letter, Warren emphasized the critical role of the Treasury and Department of Justice in protecting the American populace and the financial system. She insisted that the public has a right to know if these agencies are investigating the severe risks highlighted by both national security specialists and the crypto sector itself.
Blockchain Analysis Highlights PancakeSwap’s Role in Major Crypto Heist
Warren backed her inquiries with findings from blockchain analytics firm Allium and investigative agency TRM Labs, which illustrate PancakeSwap’s involvement in one of the largest thefts in crypto history—a $1.4 billion heist from exchange Bybit in February. Allium’s data indicates that approximately 20% of the stolen assets, totaling $263 million, were laundered via PancakeSwap.
Concerns Over Anti-Money Laundering Controls
Warren pointed out that users can engage with DEXs without stringent anti-money laundering protocols, such as Know Your Customer (KYC) requirements. This lack of oversight enables individuals to misuse decentralized platforms for moving, mixing, and withdrawing illicit funds. She warned that without regulatory scrutiny, criminal actors could increasingly acquire cryptocurrencies on these exchanges and conduct financial transactions without the oversight that traditional institutions would typically provide.
PancakeSwap’s Involvement with Trump-Linked Stablecoin
In addition to North Korea’s cyber activities, Warren also noted PancakeSwap’s connection with USD1—the dollar-pegged stablecoin from World Liberty Financial, a DeFi project associated with Trump. Earlier this year, PancakeSwap partnered with World Liberty Financial to promote liquidity, incentivizing trading in USD1 pairs with over $1 million in prizes.
Concerns Over Political Influence on Regulatory Decisions
Last week, USD1 became a crucial component of Binance’s operations, following the pardon of the exchange’s co-founder Changpeng “CZ” Zhao. Binance has denied any correlation between the pardon and the enhanced role of USD1 within its systems. Warren has previously criticized this pardon and sought clarification from the Department of Justice regarding the company’s connections to the former president. She expressed her worries about any undue political influence that might affect enforcement decisions, particularly as PancakeSwap appears to be promoting interest in tokens issued by Trump’s crypto firm.
Continued Criticism of Crypto Industry
Warren’s skepticism towards cryptocurrency and its potential dangers to the public is well-documented. In October, she and Senator Bernie Sanders criticized a Trump executive order that would enable investors to include cryptocurrencies in their 401(k) retirement plans. She has also condemned the lobbying efforts of the crypto industry and expressed concerns regarding the stablecoin-focused GENIUS Act, which she argued could exacerbate corruption linked to the Trump administration.
Broader Allegations of Corruption
Warren’s apprehensions are not without support. Recently, House Democrats labeled the Trump administration as “the world’s most corrupt crypto startup operation,” following a partisan report detailing the family’s crypto connections. This report referenced a Reuters investigation suggesting that the Trump family had profited over $800 million from crypto-related ventures in 2025, with disclosures indicating that the former president himself earned more than $58 million from these investments in 2024.
