FBI Warning About Cryptocurrency Transfers ‘Exploited’ Targets Mix Makers
The Federal Bureau of Investigation's recent warning to Americans against using unregistered cryptocurrency money transfer services may be aimed at smart contract-driven privacy devices, a crypto lawyer said.
In an April 25 public service announcement, the FBI urged Americans to use only registered Cryptocurrency Money Services businesses that comply with Know Your Customer (KYC) and Anti-Money Laundering (AML) laws.
In the announcement, the FBI wrote that it recently conducted law enforcement operations against unlicensed cryptocurrency services “in accordance with federal law.” Any person using the services without a license will face “financial disruption” during law enforcement actions, especially when money is mixed with illegally obtained funds.
Michael Balsina, a digital asset partner at Piper Alderman Law Firm, told Cointelegraph that the FBI's announcement appeared to be intended to warn users against using crypto-mingling services, but noted that the “broad” warning missed many details.
While this may seem like an attempt to warn consumers away from smart contract-driven privacy tools like Samori or Tornado Cash, it's a far-reaching warning that draws attention to how decentralized systems work.
Basina added: “A regulation that is fit for purpose and clear guidance will replace regulation on implementation, it will be better for consumers.”
On April 25, the founders of Bitcoin wallet and crypto-mingling service Zamora Wallet were arrested on charges of money laundering.
Zamora Wallet CEO Keon Rodriguez and CTO William Hill have been charged with money laundering and operating an unauthorized money transfer business, which currently carries a maximum sentence of 25 years in prison.
Other commentators on X also described the nebulous definition of what can be considered an MSB and questioned what it means for crypto service providers.
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Describing the FBI's announcement as “ridiculous,” Bankless co-founder Ryan Sean Adams pointed out in an April 25 post to X what services fall under the MSB designation.
“Oh and is your code or wallet MSB? Maybe, maybe not – but now we're binding privacy divs and calling them MSBs…”
These developments come amid a growing legal dispute between crypto companies and regulators in the United States.
On April 25, Ethereum development company Consensus filed a lawsuit against the SEC, alleging that the regulator orchestrated a campaign to “manipulate the cryptocurrency of the future” by treating Ether (ETH) as a security.
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