The FBI issued a warning to Americans regarding the use of cryptocurrency money-transmitting services that are not registered as Money Services Businesses (MSBs) in accordance with US federal law. Failure to adhere to anti-money laundering requirements outlined in 31 USC § 5330 and 31 CFR §§ 1010 and 1022 may lead to financial disruptions for users during law enforcement operations conducted against unlicensed entities. It is essential for individuals to check if a service is registered as an MSB with the US Treasury Department’s Financial Crimes Enforcement Network (FinCEN) before utilizing it to prevent potential loss of access to their funds.
The FBI specifically advised against using crypto money-transmitting services that do not collect Know Your Customer (KYC) information from customers when required. KYC information typically includes personal details such as name, date of birth, and address. Furthermore, the mere presence of a service in an app store does not guarantee its legality or compliance with federal requirements. Before engaging with a crypto money-transmitting service, individuals should verify its registration as an MSB with FinCEN. Notable cryptocurrency firms like Coinbase and Kraken were identified as legal entities when using the registration status-checking tool provided by FinCEN.
The US government has heightened its crackdown on crypto mixers in recent years, following incidents such as the Axie Infinity hack and the Hamas attack on Israel. The Treasury Department’s Office of Foreign Asset Control (OFAC) imposed sanctions on Blender.io and added addresses linked to the Tornado Cash mixer to the list of Specially Designated Nationals, preventing US residents from using the service. The DOJ also made headlines by arresting the founders and CEO of Samourai Wallet, a popular privacy-focused Bitcoin wallet and mixer, on charges of laundering over $100 million in criminal proceeds. Additionally, the DOJ collaborated with law enforcement agencies in Portugal and Iceland to arrest one of Samourai Wallet’s founders and seized the company’s web servers and domain.
Individuals are cautioned to avoid services openly advertising themselves for illegal purposes and to exercise caution when using cryptocurrency platforms known to be utilized by criminals for money laundering activities. It is essential to be vigilant when engaging with crypto services to protect oneself from potential financial disruptions as a result of law enforcement actions against non-compliant entities. By staying informed about the registration status of crypto money-transmitting services and avoiding those that do not comply with federal regulations, individuals can safeguard their funds and mitigate the risks associated with using unlicensed entities in the cryptocurrency space.
