FBI Caution Regarding Crypto Money Transmitters Possibly Targeting Mixers

A recent advisory from the Federal Bureau of Investigation (FBI), advising against the use of unlicensed cryptocurrency money-transmitting services, may specifically target smart-contract-driven privacy tools, suggests Michael Bacina, a partner at Piper Alderman.

The FBI’s public service announcement on April 25 emphasized the importance of using registered Cryptocurrency Money Services Businesses (MSBs) compliant with Know Your Customer (KYC) and Anti-Money Laundering (AML) regulations. It warned of potential financial disruptions for those using unlicensed services during law enforcement actions, particularly if their funds are mingled with unlawfully acquired money.

Bacina observes that while the FBI’s statement seems directed at discouraging the use of crypto mixing services like Samourai or Tornado Cash, it lacks the necessary depth to understand the nuances of decentralized systems.

He emphasizes the need for purposeful regulation and clear guidance for cryptocurrencies to replace enforcement-based regulation, ensuring better outcomes for consumers.

The arrest of Samourai Wallet’s CEO Keonne Rodriguez and CTO William Hill on April 25 for alleged money laundering and operating an unlicensed money-transmitting business underscores the legal uncertainties surrounding cryptocurrency service providers.

Various commentators have raised concerns about the ambiguous definition of what constitutes an MSB and its implications for crypto services. Bankless co-founder Ryan Sean Adams described the FBI’s advisory as unsettling, questioning which services might fall under the MSB designation.

These developments occur amid heightened legal tensions between crypto firms and regulators in the U.S. For instance, Ethereum development firm Consensys filed a lawsuit against the SEC on April 25, alleging the regulator’s attempts to control the cryptocurrency future, particularly regarding Ether’s classification as a security.