FBI warning against crypto money transmitters ‘appears’ to be aimed at mixers

Must read

A recent FBI announcement urging Americans not to use unlicensed money-transmitting services misses “a great deal of nuance” about how crypto services operate, says Piper Alderman Partner Michael Bacina.

1633 Total views

7 Total shares

FBI warning against crypto money transmitters ‘appears’ to be aimed at mixers

Own this piece of crypto history

Collect this article as NFT

The Federal Bureau of Investigation’s recent warning to Americans from using unregistered cryptocurrency money-transmitting services might be aimed at smart-contract-driven privacy tools, according to a crypto lawyer.

In an April 25 public service announcement, the FBI urged Americans only to use registered Cryptocurrency Money Services Businesses that comply with existing Know Your Customer (KYC) and Anti-Money Laundering (AML) laws.

The FBI warned Americans against using unlicensed money-transmitting services. Source: FBI

In its announcement, the FBI wrote that it had recently conducted law enforcement operations against cryptocurrency services that were not licensed in “accordance with federal law,” adding that anyone using unlicensed services could “encounter financial disruptions” during law enforcement actions, particularly if the money is intermingled with illegally obtained funds.

Michael Balcina the Digital Asset Partner at Piper Alderman lawyers told Cointelegraph that the FBI’s announcement seemed to be directed at warning users against using crypto mixing services but noted that the “broad” warning missed much of the finer details.

“While this appears an attempt to warn consumers away from smart-contract driven privacy tools like Samouri or Tornado Cash, it’s a very broad warning which misses a great deal of nuance in how decentralized systems operate.”

“The sooner fit-for-purpose regulation and clear guidance for cryptocurrency replaces regulation by enforcement, the better the outcomes for consumers will be,” Bacina added.

On April 25, the co-founders of Bitcoin wallet and crypto mixing service Samourai Wallet were arrested on charges of money laundering.

Samourai Wallet CEO Keonne Rodriguez and CTO William Hill were charged with money laundering and operating an unlicenced money-transmitting business, and currently face a maximum sentence of up to 25 years in prison.

Several other commentators on X also noted the hazy definition of what could potentially be considered an MSB and questioned what it could mean for crypto service providers.

Related: Crypto market stumbles amid arrest of Samourai Wallet founders

Describing the FBI’s announcement as “eerie,” Bankless co-founder Ryan Sean Adams, drew attention to what kind of services would technically fall under the designation of an MSB in an April 25 post to X. 

“Oh and is your code or wallet a MSB? maybe, maybe not — but we’re arresting privacy devs right now & calling them MSBs so…”

These developments come amid a broader escalation of legal tensions between crypto firms and regulators in the United States.

On April 25, Ethereum development firm Consensys sued the SEC, alleging the regulator had orchestrated a campaign to “seize control over the future of cryptocurrency” with enforcement actions aimed at deeming Ether (ETH) as a security.

Magazine: Lazarus Group’s favorite exploit revealed — Crypto hacks analysis

More articles

Latest article