Bitcoin Mixers Pull Out of the US Amid Regulatory Heat

Following the arrest of the developers of Samourai Wallet, several other Bitcoin coin mixing operations see the writing on the wall and are leaving the United States for more crypto-friendly regions.

In April, the US Attorney’s Office of the Southern District of New York charged Samourai Wallet founders Keonne Rodriguez and William Lonergan Hill with operating “a cryptocurrency mixer” that the agency said executed over $2 billion in unlawful transactions and facilitated more than $100 million in money laundering transactions with illegal dark web marketplaces.

After Samourai Wallet shut down, Wasabi Wallet developers ZKSnacks announced the preemptive closure of its mixing service, banning U.S. customers from using its services.

“Wasabi’s website and API are unaccessible from the US effective immediately,” a Wasabi Wallet representative told Decrypt. “ZkSNACKs is suspending its coinjoin service for all users at the end of May.”

Image: A notice U.S. customers see on the Wasabi Wallet website.

Hardware wallet Trezor followed suit on May 2, announcing that its mixer service was also going away.

“We deeply value the privacy of our users, and it is with great regret that we must announce the discontinuation of the Coinjoin feature for Trezor Suite by [June 1] latest, as our partner will no longer provide this service,” Trezor wrote on Twitter.

American citizens are being increasingly shut out as the U.S. Securities and Exchange Commission (SEC) leads other regulatory and law enforcement agencies along a warpath against cryptocurrency.

The SEC has established a long history of what many critics—including regulators within the agency—have called “regulation by enforcement.” It has charged crypto coin mixer developers for acting as illegal money transmitters, while the U.S. Department of Justice has charged several crypto developers with money laundering.

A coin mixer or “coinjoin” is a service that allows users to obfuscate the origin and destination of transactions. Users send cryptocurrency to the service, which is mixed with others before being relayed to the receiving address, hiding the connection between the sender and recipient.

In February 2023, the Sinbad Bitcoin mixer was revealed to be the rebrand of the Blender Bitcoin mixer, which was previously shut down by federal regulators. By November, Sinbad was also offline as the website was seized by law enforcement.

Perhaps the most well-known mixer, Tornado Cash, was shut down in August 2022 after the US Treasury Department added the Ethereum mixing service to its Specially Designated Nationals list, effectively banning American citizens from using the tool or transacting with its addresses.

A representative for Trezor, and Samourai Wallet, did not immediately respond to a request for comment from Decrypt.

Edited by Ryan Ozawa.

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