FOIA Request Reveals US Mint Issuance Of Fake 2021 American Gold Eagle Coins And Exaggerated Use Of Crypto Used By Hamas

News stories sometimes inspire my Freedom of Information Act requests. FOIA Request Reveals US Mint Issuance Of Fake 2021 American Gold Eagle Coins And Exaggerated Use Of Crypto Used By Hamas

One of my recent requests was in response to a story by the Wall Street Journal that detailed a report the Treasury Department sent to Congress about Hamas and cryptocurrency.

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Late last week, Treasury responded with some pretty insightful records. Plus, on the fiat money front, I obtained documents from Treasury’s internal watchdog about three separate probes in 2022 involving US Mint coins.

If you like reading our FOIA Files (Freedom of Information Act) check back often.

On March 13, the Journal reported that Treasury officials sent Congress a report disclosing that the agency was investigating $165 million in cryptocurrency transactions directed to Hamas.

The funds were suspected of being used to prop up the Palestinian militant organization that’s designated a terrorist organization by the US, before the Oct. 7, 2023 attack in Israel. Neither the report, nor a letter attached to it, were publicly released. I set out to obtain copies of both.

I’ve got good news and bad news. I’ll start with the former. Treasury released the letter, written by Deputy Treasury Secretary Wally Adeyemo, in response to my FOIA request.

The two-page letter dated March 12, sent to the chairs and ranking members of the Senate Banking Committee and the House Financial Services Committee, adds some context to the Journal’s reporting.

And it gives insight into what prompted Treasury to share the report with lawmakers in the first place.

Turns out that an “ongoing analysis” at Treasury continued to “identify risks” with digital currencies. In particular, Adeyemo said that although Hamas and other terror groups still largely prefer “traditional financial products,” he worries that won’t always be the case.

“I remain concerned that as we cut off their access to traditional finance these groups will increasingly turn to virtual assets,” he wrote.

As a result, Adeyemo implored Congress to approve a proposal that Treasury sent to Congress last November. It sought to develop “a set of new authorities to protect against the national security risks”.

Adeyemo highlighted the difficulty that financial crimes fighters face when they attempt to follow money related to Hamas.

In particular, he said that officials can’t always rely on financial institutions to adequately flag some transactions involving the group. That’s because so much of the crypto world remains a black box.

Adeyemo explained that Treasury needs to “modernize” its arsenal to take on crypto exchanges that offer services in the US, while also operating in jurisdictions with “weak or non-existent” rules regarding sanctions, money laundering and terrorism funding.

“A final proposal would explicitly provide Treasury’s Office of Foreign Assets Control the authority to deploy secondary sanctions, an impactful and flexible tool, against virtual asset firms doing business with sanctioned entities,” he wrote.

To be clear, Treasury’s complaints about crypto are hardly new. They date back more than a decade. In 2018, I obtained secret documents from a Treasury Department whistleblower that said the agency was concerned its financial crimes unit didn’t have adequate resources to track and slow the flow of crypto used to fund terrorism.

The fact that Treasury officials are still trying to win support from Congress, years after floating proposals and nearly a year after the Oct. 7 attacks in Israel, underscores how contentious the issue is.

Some Republican members of Congress accused the Biden administration of scapegoating crypto. Representative Tom Emmer, a Republican member of the House Financial Services committee, said there’s no urgent need to grant Treasury any new tools, in part because he believes reports of Hamas using crypto are exaggerated.

On the other side of the aisle, Senator Elizabeth Warren, a member of the Senate Banking Committee, who boasts of being an “outspoken advocate” for crypto regulations, sent a letter to Treasury Secretary Janet Yellen in April.

In it, she said that while she supported Adeyemo’s plan, she wanted any additional Treasury authority to be codified as part of a “new regulatory framework around the $157 billion stablecoin market.”

Since last October, the committee’s held a classified briefing and two public hearings on illicit financing and crypto’s role in funding Hamas.

Nevertheless, Treasury’s proposal hasn’t moved forward since Adeyemo sent the letter and report to Congress in March.

A spokesperson for the committee told FOIA Files that “no one has pushed harder to stop the illicit financing of terrorism and drug trafficking” than Democratic Senator Sherrod Brown, the committee’s chairman and one of the recipients of Adeyemo’s letter.

“He will continue to work with Republicans and Democrats to pass legislation to cut off this illicit funding.”

Now, the bad news. Treasury won’t release the report that allegedly says, according to the Journal, that Treasury is investigating $165 million in crypto transactions directed to Hamas.

The division that prepared the report, the Financial Crimes Enforcement Network, or FinCEN, withheld it in its entirety because it contains information “pertaining to monetary instruments transactions” protected from disclosure under the Bank Secrecy Act.

The only detail about the report that’s new that I can share is that it’s seven pages. I know as much because Treasury sent me seven pages that are blank, except for the “Withheld” stamp.

Coin Of The Realm

Alright, let’s move into fiat money. Treasury’s inspector general kept busy in 2022 investigating three separate incidents involving US Mint coins. I recently obtained copies of reports from investigations closed that year.

In February 2022, a US Mint employee told the IG that a Mint manager sold 100 coins to the US Naval Academy “at below cost” in violation of the agency’s policy. But the IG’s probe turned up a memorandum of understanding “written and approved by Mint Counsel to supply the coins” to the Naval Academy “at Mint cost.”

“Mint management informed the OIG that this sale was done to increase interest in other markets,” the IG report about the investigation said.

The case was closed.

A couple of months later, the IG wrapped up an investigation sparked after it learned that a coin dealer may have been selling US Mint “error coins” that weren’t lawfully issued. After the IG tracked down the dealer, its investigation probed whether a former senior US Mint official was involved in the scheme.

The IG determined that the former official had been “engaged” by a “third party” to lend authenticity to the stolen coins by signing “labels to be placed inside the coin packaging, while also certifying and grading each coin.”

Ultimately, the IG wasn’t able to determine if the coins sold were actually stolen error coins. The IG referred the coin dealer to the US Attorney’s Office for the District of Minnesota for criminal prosecution on Feb. 24, 2022. Prosecutors declined to pursue it and the case was closed.

Finally, in November 2022, the IG finished another error coin probe based on a complaint from the US Mint that alleged “a third-party coin and banknote grading company had possession of error coins, specifically numerous 2021 American Gold Eagle coins.”

The IG’s investigation concluded that the coins in question “were struck with a West Point ‘W’ mint mark and distributed in error” by the US Mint.

FOIA Request Reveals US Mint Issuance Of Fake 2021 American Gold Eagle Coins And Exaggerated Use Of Crypto Used By Hamas

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