FinCEN Targets Crypto Mixers Over Laundering and National Security Concerns
FinCEN’s goal is to mandate financial institutions to report transactions involving international CVC mixing services, which the agency identifies as an “acute money laundering and national security risk.” Notable bitcoin (BTC) and ethereum (ETH) mixing services using Coinjoin enable users to combine their transactions, thereby masking the origins and endpoints of funds. Andrea Gacki, the director of FinCEN, remarked that virtual currency mixing services empower the “ransomware ecosystem, rogue state actors.
Treasury Department’s classifications of multiple cryptocurrency mixing services in the past year, such as Tornado Cash and Blender.io, the new regulations were proposed. It’s alleged that these platforms aided in laundering millions from hacks linked to countries like North Korea. However, advocates of privacy assert that clampdowns on mixers negatively affect ordinary users dependent on them. Coin Center, a nonprofit emphasizing cryptocurrency policy matters, lodged a complaint against the Treasury Department concerning the Tornado Cash prohibition in October 2022, claiming it surpasses the Treasury’s statutory authority. Coinjoin transactions conceal user identities by merging funds from varied origins.
