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Wasabi Wallet US Block Could Be First of Many After Samourai Charges 

Last Updated April 29, 2024 4:12 PM
Shraddha Sharma
Last Updated April 29, 2024 4:12 PM

Key Takeaways

  • zkSNACKs and ACINQ limit services amid US regulatory pressures.
  • Samourai Wallet co-founders were recently charged with money laundering allegations.
  • US authorities have intensified scrutiny of cryptocurrency services impacting platforms.

Cryptocurrency wallet services are limiting operations in the US following increased regulatory scrutiny. Wasabi Wallet by zkSNACKs and Phoenix Wallet by ACINQ will reportedly halt their operations for American customers.

Broader enforcement action could come after the arrest of Samourai Wallet co-founders on charges of money laundering and unlicensed operation.

US Crackdown on Crypto Wallet Services

In separate announcements, zkSNACKs  Wasabi Wallet and ACINQ’s Phoenix Wallet have both announced the discontinuation of their services in the United States.

zkSNACKs noted that it has blocked US citizens and residents from accessing its websites, downloading, and using its wallet and related services. It includes APIs and RPC interfaces. The decision was made effective on April 27, indicating a swift response to regulatory scrutiny. The block extends to all associated sites, including wasabiwallet.io and zksnacks.com.

The regulatory action has also cast doubt on the legality of certain operations of self-custodial wallet providers and Lightning service providers. ACINQ, in a post, expressed concerns about potential classifications of such services as Money Services Businesses, which would subject them to stringent regulatory requirements.

The Samourai Wallet Case and Its Implications

Samourai Wallet’s co-founders, Keonne Rodriguez and William Hill, recently faced charges from the US Justice Department.

They are accused of operating an unlicensed money transmitting business and committing money laundering, with their service allegedly facilitating over $100m in laundered money. It was alleged that the funds went through a crypto mixer used by criminals.

Their platform was used to obscure the origins of over $2 billion tied to illegal activities, including transactions from dark web markets like Silk Road and Hydra Market.

It is worth noting that crypto mixers and privacy tools like Tornado Cash, Railgun, YoMixer, and Sindabad, among others, have been facing legal charges as well.

However, the indictment of Rodriguez and Hill marks a turning point in how US authorities handle these crypto services. The enforcement actions included seizing Samourai’s web servers and removing their app from the Google Play Store, signaling a tough stance on crypto services that enable or facilitate illegal transactions.

US Attorney Damian Williams said in a government press release  : “Rodriguez and Hill allegedly knowingly facilitated the laundering of over $100 million of criminal proceeds from the Silk Road, Hydra Market, and a host of other computer hacking and fraud campaigns. Together with our law enforcement partners, we will continue to relentlessly pursue and dismantle criminal organizations that use cryptocurrency to hide illicit conduct.”

Is it the End of Wallet Services?

The US government’s recent actions against Samourai Wallet are just the beginning of a broader crackdown. It is  one of the main reasons crypto services like Wasabi Wallet are limiting services in the US.

These developments and authority actions will continue enforcing compliance with financial regulations, while more crypto players will be forced to wind up businesses.

The crypto offerings in question will have to remodel to control how their wallets and mixers operate without allowing clients to misuse privacy and anonymity features.

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