According to a statement from the Federal Bureau of Investigation (FBI) on Thursday, authorities strongly urge Americans not to use unregistered money service businesses (MSBs) for cryptocurrency transfer services. However, this warning is widely seen as targeting the mixing protocols that have recently come under regulatory scrutiny.
FBI: Avoid Using Unlicensed Cryptocurrency Transfer Services
Use MSB License Search Tool: Check for Concerns
Targeting Cryptocurrency Mixing Protocols?
Is There Danger in Not Being an MSB?
The FBI warns that Americans should avoid using cryptocurrency services provided by companies that are not registered as money service businesses (MSBs) and do not comply with anti-money laundering regulations. The FBI has recently taken enforcement actions against unregistered cryptocurrency services and has reminded users of their cryptocurrency transfer services that their funds may be restricted during enforcement, especially when their cryptocurrency is linked to money laundering activities.
And they add, “Avoid using services that can send cryptocurrencies without providing KYC information, as such services may not be legal.”
It is reported that MSB licenses are issued by the Financial Crimes Enforcement Network (FinCEN) and serve as proof that the registered companies comply with government registration requirements for anti-money laundering and counter-terrorism financing, but do not endorse or guarantee the products or investor protection aspects.
Cryptocurrency services that intentionally violate the law or knowingly facilitate illegal transactions will be investigated by law enforcement agencies, and users who use such services may lose the funds they have invested after enforcement actions.
In addition, the FBI also provides a FinCEN MSB License Search website, stating that if there are concerns, users can search for service company names:
A few simple steps can help prevent you from inadvertently using non-compliant services.
Facing the FBI’s warning, Cointelegraph expressed concerns about the cryptocurrency industry, quoting lawyer Michael Bacina:
Perhaps it is a good thing for investors to develop appropriate cryptocurrency regulations and clear guidance as soon as possible, instead of relying on enforcement actions time and time again.
And they add, “Although the warning is clearly aimed at recent cases involving mixing protocols such as Tornado Cash, the warning is too broad and ignores many details of how decentralized systems operate.”
In this regard, looking back at the enforcement actions from various countries in recent months and years, mixing protocols have been heavily targeted.
March 2023:
Largest money laundering protocol on the dark web seized! Germany and the United States confiscate over 1,900 bitcoins from the encrypted mixer ChipMixer.
January 2024:
In response to the hacking of Orbit Bridge, South Korea’s regulators will crack down on the illegal use of mixing protocols.
March 2024:
Founder of mixing protocol Bitcoin Fog convicted of money laundering, Tornado Cash case to be handled similarly?
August 2022 to April 2024:
Tornado developers Roman Storm advocates for “writing code freely” and requests the US Department of Justice to drop charges.
April 2024:
Regulatory crackdown on mixing services intensifies! Founder of Samourai Wallet accused of money laundering by the US Department of Justice.
Ryan Sean Adams, co-founder of Bankless, expressed concerns about the vague definition of MSB in the warning on Twitter, reminding users and developers to be aware of what services would be considered MSBs but have not applied for registration:
Don’t use unregistered cryptocurrency transfer services? So if you’re not in this database, it’s not allowed.
And he said, “Is your code or wallet an MSB? Maybe it is, maybe it isn’t, but we’re currently arresting privacy protocol developers.”
Bitcoin fog
FBI
MSB
Samourai Wallet
TornadoCash
Mixing
Mixing protocols
Related Reading:
Regulatory crackdown on mixing services intensifies! Founder of Samourai Wallet accused of money laundering by the US Department of Justice.
Chainalysis: Exchanges preferred for laundering proceeds, North Korean hacker group switches to new mixing protocol YoMix.