According to a crypto lawyer, the recent warning issued by the Federal Bureau of Investigation (FBI) to Americans about using unregistered cryptocurrency money-transmitting services may be targeting privacy tools driven by smart contracts.
In its public service announcement on April 25, the FBI advised Americans to only use registered Cryptocurrency Money Services Businesses that comply with existing Know Your Customer (KYC) and Anti-Money Laundering (AML) laws. The FBI specifically cautioned against using unlicensed money-transmitting services, stating that it had recently taken law enforcement actions against such services that did not comply with federal law. The FBI further warned that individuals using unlicensed services could face financial disruptions during law enforcement actions, particularly if the funds were mixed with illegally obtained money.
Michael Balcina, a Digital Asset Partner at Piper Alderman lawyers, commented that the FBI’s announcement appeared to be targeting users of crypto mixing services. However, he also noted that the warning was quite broad and did not delve into the specifics. Balcina emphasized the need for clear regulation and guidance for the cryptocurrency industry, rather than relying on enforcement measures.
On April 25, the co-founders of Samourai Wallet, a Bitcoin wallet and crypto mixing service, were arrested on charges of money laundering. The CEO, Keonne Rodriguez, and the CTO, William Hill, were charged with money laundering and operating an unlicensed money-transmitting business, which carries a maximum sentence of up to 25 years in prison.
The ambiguous definition of what qualifies as a Money Services Business (MSB) was also highlighted by several commentators, who questioned the implications for crypto service providers.
These developments occur amidst an escalating legal tension between cryptocurrency firms and regulators in the United States. Consensys, an Ethereum development firm, recently filed a lawsuit against the Securities and Exchange Commission (SEC), alleging that the regulator was attempting to seize control over the future of cryptocurrency by deeming Ether (ETH) as a security.
In related news, analysis of crypto hacks revealed the preferred exploit of the Lazarus Group.