The U.S. Treasury Targets Crypto Mixing Services
The U.S. Department of the Treasury has expressed a negative stance towards crypto mixing services, also known as CVCs (Convertible Virtual Currency Mixing Services). While these services have legitimate uses for privacy-focused individuals who want to avoid being tracked by blockchain analysis tools, they are also commonly utilized by cybercriminals. The most notable mixer, Tornado Cash, is currently facing legal charges that could result in a lengthy prison sentence for its founders.
FinCEN Aims to Outlaw Crypto Mixers
FinCEN, the U.S. Treasury’s Financial Crimes Enforcement Network, has proposed a rule to designate crypto mixers as a class of transactions associated with primary money laundering concerns. This decision follows previous cases such as the Bitzlato exchange takedown and the Axie Infinity Heist. FinCEN’s director, Andrea Gacki, stated that this proposal would mark the first use of Section 311 Authority against an entire class of transactions.
Section 311 Authority and Its Impact
Section 311 is a provision within the Patriot Act that grants the U.S. Treasury the power to revoke banking privileges from specific accounts, institutions, jurisdictions, or classes of transactions deemed as primary money laundering concerns. When Section 311 is applied, the targeted entity loses access to the global banking system, significantly impeding its financial operations.
Hot Take: FinCEN Takes Action Against Crypto Mixers
The U.S. Treasury’s move to outlaw crypto mixers reflects their concern over the potential illicit activities facilitated by these services. While there are legitimate reasons for using mixing services, such as privacy protection, the prevalence of cybercriminals exploiting them cannot be ignored. By utilizing Section 311 Authority against an entire class of transactions, FinCEN aims to disrupt the flow of ill-gotten gains and combat money laundering within the crypto ecosystem.
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