Councilor Warren Calls for Investigation into PancakeSwap: DeFi's No KYC Policy Has Become a National Security Vulnerability!

Elizabeth Warren Calls Out PancakeSwap, Urges DHS and DOJ to Initiate National Security Review

U.S. Democratic Senator Elizabeth Warren recently renewed her focus on decentralized finance (DeFi), officially sending letters to Secretary of the Treasury Scott Bessent and Attorney General Pam Bondi, requesting an investigation into whether the decentralized exchange PancakeSwap poses a national security risk.

Source: Elizabeth Warren U.S. Democratic Senator Elizabeth Warren Sends Letter to Secretary of the Treasury Scott Bessent and Attorney General Pam Bondi

In her letter, Warren explicitly states that PancakeSwap involves several highly sensitive issues, including North Korean hacker fund flows, anti-money laundering regulatory gaps, and potential political influence related to the Trump family’s crypto ventures.

She emphasizes that Congress is currently reviewing legislation related to the crypto market structure. Before preventing terrorist organizations, criminal groups, and hostile nations from abusing DeFi, the executive branch has the responsibility to clarify whether these risks have been thoroughly investigated. Warren requests that the Treasury Department and DOJ respond by January 12 at the latest, indicating whether relevant investigations have been initiated and whether current regulations are sufficient to address the security challenges posed by decentralized exchanges.

$1.4 Billion Theft Exposed, About 20% of Funds Laundered Through PancakeSwap

In her letter, Warren cites research from multiple blockchain analysis firms, pointing out that PancakeSwap played a key role in one of the largest crypto thefts in history. According to reports from analytics firms Allium and TRM Labs, in February this year, the crypto exchange Bybit was hacked for approximately $1.4 billion in assets, with about 20%, or roughly $263 million, exchanged and laundered through PancakeSwap.

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The U.S. Treasury has previously stated multiple times that North Korea has long used cyberattacks and cryptocurrency money laundering to fund its missile and weapons of mass destruction programs. Warren believes that decentralized exchanges without KYC (Know Your Customer) requirements are becoming an “ideal outlet” for criminal funds, allowing illicit actors to transfer, mix, and cash out illegal proceeds with minimal oversight. She warns that without effective regulation, platforms like these will continue to be exploited, posing a serious threat to the U.S. financial system and national security.

$USD1 Relationship with Trump Family Sparks Political Influence Concerns

In addition to North Korean fund flows, Warren also specifically points out interactions between PancakeSwap and the crypto project World Liberty Financial, supported by the Trump family. According to foreign media investigations, the project’s issued USD stablecoin $USD1 has over 90% of its trading volume concentrated on PancakeSwap. The two parties even launched liquidity promotion activities last year, offering rewards exceeding $1 million to encourage trading $USD1 related trading pairs.

Warren notes that such collaborations are particularly noteworthy given the context of the Trump administration being accused of adopting a more lenient stance toward crypto enforcement.

In her letter, she explicitly states her “particular concern about any improper political influence from the Trump administration affecting regulation and enforcement decisions.”

The White House continues to deny any conflicts of interest, emphasizing that the President’s and his family’s crypto investments do not influence government policy. PancakeSwap has yet to respond officially to the related allegations.

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DeFi Regulation Becomes a Negotiation Red Line, Legislative Process Faces New Variables

Amid this controversy, the U.S. Congress is negotiating the crypto market structure bill, with whether to include AML and identity verification regulations for DeFi being one of the most contentious issues.

Warren has long argued that unregulated DeFi platforms handling hundreds of millions of dollars daily without requiring any identity disclosure constitute systemic loopholes.

However, within the Senate Banking Committee, some Democrats have chosen to collaborate with Republicans to push the bill forward, while Warren is increasingly excluded from core negotiations. Republicans are cautious about restricting DeFi, viewing it as a “red line” for industry-supporting legislation. As legislative timelines are pushed into early next year and potentially clash with federal budget negotiations, there is a risk of another government shutdown.

In this context, Warren’s call for an investigation into PancakeSwap is not only a critique of a single platform but is also seen as an attempt to refocus national security and conflict-of-interest issues at the heart of crypto legislation. As North Korean hackers, stablecoin politics, and DeFi regulation debates intertwine, the future direction of U.S. crypto policy faces unprecedented pressure testing.