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US Treasury Targets Crypto Mixers as Primary Money Laundering Concern
According to CryptoPotato, the U.S. Department of the Treasury has taken a negative stance on crypto mixing services, also known as Convertible Virtual Currency Mixing Services (CVCs). While there are legitimate uses for these services, such as privacy-focused customers seeking to avoid being tracked by blockchain analysis tools, cybercriminals also frequently utilize them. Tornado Cash, a well-known mixer, is currently facing charges in a Manhattan court that could result in a 20-year prison sentence for its founders.
The Financial Crimes Enforcement Network (FinCEN) of the U.S. Treasury has now targeted crypto mixers as a whole, aiming to outlaw them entirely. A Notice of Proposed Rule Making (NPRM) submitted by FinCEN suggests that CVCs should be designated as a class of transactions of primary money laundering concern, building on findings from cases such as the Bitzlato exchange takedown and the Axie Infinity Heist.
Andrea Gacki, FinCEN's director, stated that the proposed NPRM targeting crypto mixers would be the first use of Section 311 Authority against an entire class of transactions. Previously, Section 311 had only been used against individual companies, banks, or countries, such as a private Andorran Bank, Bitzlato, Iran, and North Korea. Section 311 is a part of the Patriot Act that grants the U.S. Department of Treasury the power to remove banking privileges from certain types of accounts, foreign jurisdictions, institutions, or classes of transactions if they are deemed a primary money laundering concern. Once Section 311 is applied, the targeted entity is essentially cut off from the global banking system, significantly hindering its financial survival.
The Financial Crimes Enforcement Network (FinCEN) of the U.S. Treasury has now targeted crypto mixers as a whole, aiming to outlaw them entirely. A Notice of Proposed Rule Making (NPRM) submitted by FinCEN suggests that CVCs should be designated as a class of transactions of primary money laundering concern, building on findings from cases such as the Bitzlato exchange takedown and the Axie Infinity Heist.
Andrea Gacki, FinCEN's director, stated that the proposed NPRM targeting crypto mixers would be the first use of Section 311 Authority against an entire class of transactions. Previously, Section 311 had only been used against individual companies, banks, or countries, such as a private Andorran Bank, Bitzlato, Iran, and North Korea. Section 311 is a part of the Patriot Act that grants the U.S. Department of Treasury the power to remove banking privileges from certain types of accounts, foreign jurisdictions, institutions, or classes of transactions if they are deemed a primary money laundering concern. Once Section 311 is applied, the targeted entity is essentially cut off from the global banking system, significantly hindering its financial survival.
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