The U.S. Department of Treasury is scrutinizing crypto-mixing services, known as convertible virtual currency mixing services (CVCs), due to their potential use by cybercriminals. While these services can have legitimate privacy benefits, they are increasingly being employed for illicit purposes. Tornado Cash, a well-known mixer, is currently facing legal charges in Manhattan.
The U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN) is proposing to ban crypto mixers entirely. They aim to categorize CVCs as transactions with significant money laundering concerns, based on cases like the Bitzlato exchange takedown and the Axie Infinity Heist.
Andrea Gacki, FinCEN’s director, highlights that this proposal is the first use of Section 311 authority against an entire class of transactions, a departure from its previous use against individual entities. The move is in response to the role of CVC mixers in enabling ransomware and other criminal activities.
Section 311, part of the Patriot Act, grants the U.S. Treasury the power to cut off banking privileges to entities or transaction types deemed a “primary money laundering concern.” This action effectively isolates the targeted entity from the global financial system, disrupting its financial operations.
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