On December 15, Elizabeth Warren put two names at the top of a letter stating where she thinks US crypto policy is actually written: Treasury Secretary Scott Bessent and Attorney General Pamela Bondi.
The question is simple on paper but delicate in practice. Are their departments investigating what she calls “national security risks” related to decentralized exchanges, and if so, how far does that review extend when the president’s business orbit is part of the story?
The hook she chose is PancakeSwap, a DeFi site that Warren says sits at the uncomfortable intersection of “accountless” trading and the kind of money that can end up on sanctions slides.
In the letter, she pointed out that PancakeSwap had been used to launder cybercrime proceeds linked to North Korea. She then turned the compliance argument into a fight in Washington, claiming that PancakeSwap had “sparked interest” in coins linked to the Trump family’s main crypto company, World Liberty Financial (WLFI), and citing a Wall Street Journal report claiming that more than 90% of USD1 transactions took place on PancakeSwap.
The easiest way to read the letter is to ignore the rhetoric and look at the three questions at the end. She asked Treasury and the DOJ to describe national security risks related to DEXs (including PancakeSwap) and to clarify gaps in statutory and regulatory authorities that could be addressed.
She also wants lists of actions agencies will take to prevent conflicts of interest and protect enforcement and national security decisions from crypto-related conflicts, explicitly including “business ties to the Trump family.” She set a response deadline of January 12, 2026.
What Warren Asked and Why PancakeSwap Was Named
Warren’s choice of target is important because it reflects a larger argument she’s been making for years: If a service looks and behaves like a financial center, regulators shouldn’t accept “but it’s decentralized” as a get-out-of-compliance card.
Its press release makes this point bluntly, describing DEX activity on a large scale and asserting that platforms like PancakeSwap and Uniswap can move huge volumes without requiring users to register or provide identification. According to her, this allows users to bypass KYC expectations that apply elsewhere in finance.
She also anchors her speech on an example of illicit financing, pointing to hackers linked to North Korea and claiming that PancakeSwap was used to facilitate laundering linked to a major theft, with a dollar amount attached.
You do not need to accept all the implications of this framework to understand why it is an effective policy. The word PancakeSwap is sticky. This makes a broad debate about DeFi, sanctions, and anti-money laundering seem like a single solvable problem, in the same way that Enron and Lehman Brothers became shorthand in previous crises.
It also allows him to ask a question that Treasury and the DOJ cannot comfortably answer in public. If they say they are investigating, they risk revealing a delicate law enforcement position. If they say no, they hand her a quote that she can easily use as a weapon against crypto.
Under the hood, the mechanics are a mess and it’s easy to miss. A decentralized exchange is not a business in a single building. It is a collection of smart contracts, liquidity pools, routers, front-ends and wallet tools that can be hosted, mirrored, geolocated or forked.
The application can hit identifiable choke points, like a hosted front end or a development entity, but you can’t stop PancakeSwap with a single switch, like you can freeze a bank account.
This is where Warren’s first two questions do some real work. She doesn’t just ask if they’re investigating. She calls for a catalog of risks and a map of legal gaps, which is another way of saying: if the current toolkit doesn’t hit DeFi cleanly, tell Congress what to rewrite.
This is oversight as discovery, and it also serves to pre-write talking points for the legislative language that will follow.
The third question is the one that makes this letter more than a reprimand when it comes to DeFi compliance. Warren is asking agencies to explain how they will prevent political interference and conflicts related to the Trump family’s business interests.
This is a demand for process safeguards, the kind that are invoked when the public does not trust the arbitrator.
To be fair, there are some serious counterpoints here, and they are not trivial.
First, DeFi is exceptionally transparent compared to traditional finance: flows are public and sophisticated analytics can quickly trace patterns. Second, much of DEX activity consists of simple trading by normal users, market makers and arbitrageurs. Third, the industry has been experimenting with compliance tools around protocols, including wallet controls, sanctions controls, and front-end controls.
Whether you think this is enough is a political judgment, but it is not accurate to treat DeFi as an anarchic vacuum with no monitoring capabilities.
The deeper tension is that DeFi makes it easier for bad actors to move value without creating an account, while making it easier for everyone else to audit flows in real time. Warren leans heavily on the first half and her critiques lean heavily on the second.
Both halves are true enough to continue this fight.
How a blocked bill can turn Warren’s surveillance mail into policy
The timing of the letter is the plot twist. Congress is “considering legislation on crypto market structure,” Warren writes, and that sentence does a lot of work.
In July, the House passed a market structure bill that would establish a federal framework for crypto and expand the CFTC’s oversight role, which the industry has called for for years.
Yet a House vote doesn’t resolve the Senate, and market structure legislation is still stuck there, even as the broader attitude toward crypto has softened in other parts of the government.
This is why Warren’s “pressure as process” approach is important. When legislation drags on, letters become leverage because they create a record, force responses, and shape the narrative that lawmakers use to justify a yes vote, a no vote, or an opt-out request.
You can see the continuity by looking back a month. On November 17, Warren and Jack Reed wrote to Bessent and Bondi about World Liberty Financial and its $WLFI governance token.
They cited reports that token sales had reached buyers linked to sanctioned or illicit actors, and explicitly linked this issue to market structure negotiations in Congress. The letter devotes pages to the governance angle, arguing that symbolic ownership can translate into influence, and repeatedly returns to conflicting issues related to the Trump family’s financial interest in the project.
Read together, the November WLFI letter and the December PancakeSwap letter form a two-part argument that’s hard to ignore if you’re a senator trying to use the language of “responsible innovation” without sounding naive.
The first part says: A crypto company linked to Trump can create a national security risk depending on who buys in and who gains influence over governance. The second part says: The trading platform that can concentrate the liquidity of a Trump-related coin is also the type of DeFi rail that illicit actors can use.
This doesn’t prove that there was wrongdoing, nor does it prove that the Trump family gets special treatment. This increases the political cost of drafting a market structure bill that sheds light on DeFi or defers safeguards in case of conflict “later.”
If you’re negotiating a Senate text, Warren basically tells you that “later” will appear as the title, and she preloads the title.
There’s also a pragmatic reading if you assume that no one here is acting in bad faith. Even pro-crypto lawmakers can look at DeFi and admit a fundamental problem: The United States has a patchwork of anti-money laundering expectations, and DEXs don’t fit neatly into categories designed for banks, brokers, and money transmitters.
Warren is pushing agencies to say, in plain language, whether their authority is sufficient, and if not, what they would like Congress to entrust to them. It’s a legitimate monitoring feature, even if you find its tone exhausting.
The bottom line is that Warren’s campaign could produce two very different outcomes, depending on how Congress and agencies respond. One of these is a narrowly tailored set of obligations that target identifiable interfaces, promoters and intermediaries, while recognizing that the code is not a client and that a liquidity pool cannot deposit SARs.
The other path is broad, vague language that treats decentralization itself as suspect, which would push activity overseas, encourage ghost frontends, and make it harder for U.S. users to interact with the most liquid markets under U.S. legal protections.
Regardless, this letter is a tactic that treats politics as infrastructure. When the Senate fails to get a bill across the finish line, the issue becomes the battleground and Warren tries to write the terrain in advance.
