The California-based bitcoin platform Swan Bitcoin warned users in an email about an indefinite block for direct use of cryptomixers. The company blamed US regulators.
The beginning of the end?
The firm referred to the fact that Swan's banking and custody partners "will no longer serve customers who directly interact with bitcoin mixing services like Wasabi, Samourai and other similar platforms."
Making a deposit or withdrawing funds from such platforms can lead to the complete closure of the Swan account by financial managers.
According to representatives of the platform, banks and depositories have changed their policies based on the new rules of the Financial Crimes Enforcement Network of the US Department of the Treasury (FinCEN). In October, the agency proposed equating cryptocurrency mixers with "money laundering centers" that threaten national security.
"Swan fully supports your right to privacy. We actively oppose government regulation that requires financial institutions to report interactions with mixers, " the platform's letter reads.
After the lockdown warning, the cryptocurrency community came out against strict regulation and pandering to the authorities.
The SamuraiWallet X account pointed out that the FinCEN initiative is still a proposal, and profanely criticized Swan for their "proactive submission".
"The worst thing is that this offer does not ask to block deposits from mixers. It even says that mixing is 100% legal. The irony is that Swan encourages its clients to engage in financial structuring in order to avoid reporting that is required of them, " noted user LaurentMT.
According to most, the new policy directly contradicts the spirit of the trading platform and the very concept of bitcoin.
Resistance attempts
Despite widespread criticism, Swan co-founder and CTO Jan Pritzker revealed what steps the company is taking to protect user privacy.
"We believe that mixers are OK, privacy is not a crime, and using unmixed bitcoins is like bringing your entire salary to the grocery store to pay for an apple. People should have the absolute right to exchange this salary for individual bills before spending it, so as not to disclose the amount of income to the clerk," Pritzker explained.
The top manager added that such behavior of banks is "expected and obvious", since institutions do not want to do additional work to prove their innocence in the case of real money laundering incidents.
According to Pritzker, for the past two years, Swan has focused on building its own and independent financial infrastructure. However, to accept payments in US dollars, the company must have an MSB license.
At the same time, all such institutions must comply with the rules of FinCEN, FATF and other unelected authorities. Even individuals who exchange currencies through P2P services fall into this category, the CTO stressed.
Licensed financial institutions are required to produce suspicious activity reports, which are required by the Bank Secrecy Act of the 1970s.
"These reports are submitted indiscriminately by banks, because the best option for them is to file a document for protection purposes, rather than delay it and face fines. We believe that this is a violation of the Fourth Amendment, which offers the government the ability to conduct unreasonable searches and arrests of law — abiding American citizens," said the Swan co-founder.
Since bitcoin is still poorly understood in Washington and the media, it easily becomes "a scapegoat for the shortcomings of the system that allows you to stop most real financial crimes," Pritzker explained.
Taking advantage of this situation, US officials pushed through a bill that restricts the use of digital assets and allows the government to oversee most transactions.
A representative of the trading platform clarified that the new rule from FinCEN does not qualify mixing cryptocurrencies as a crime, but requires much more reporting.
To combat such laws, Pritzker suggested teaching the community "the principles of self-defense and privacy." He promised to "continue pressuring the industry" to reduce the amount of KYC data needed to open accounts on Swan.
The co-founder of the platform also advised to recognize the industry's dependence on the banking sector.:
"To resist pressure from banks, we need a large selection of financial institutions willing to do business with bitcoin companies."
In addition, Pritzker stated the need to create specialized state institutions and promote supporters of cryptocurrencies in the government.
Recall that in May 2022, the US Treasury Department added the mixer to the sanctions list Blender.io and the associated bitcoin and Ethereum addresses. The agency claims that the service helped launder funds stolen by North Korean hackers, and was allegedly involved in ransomware attacks.
On August 8 of the same year, the Tornado Cash mixer was sanctioned by the United States on suspicion of laundering more than $7 billion in cryptocurrencies. The service was also used by the North Korean hacker group Lazarus Group.
The beginning of the end?
The firm referred to the fact that Swan's banking and custody partners "will no longer serve customers who directly interact with bitcoin mixing services like Wasabi, Samourai and other similar platforms."
Making a deposit or withdrawing funds from such platforms can lead to the complete closure of the Swan account by financial managers.
According to representatives of the platform, banks and depositories have changed their policies based on the new rules of the Financial Crimes Enforcement Network of the US Department of the Treasury (FinCEN). In October, the agency proposed equating cryptocurrency mixers with "money laundering centers" that threaten national security.
"Swan fully supports your right to privacy. We actively oppose government regulation that requires financial institutions to report interactions with mixers, " the platform's letter reads.
After the lockdown warning, the cryptocurrency community came out against strict regulation and pandering to the authorities.
The SamuraiWallet X account pointed out that the FinCEN initiative is still a proposal, and profanely criticized Swan for their "proactive submission".
"The worst thing is that this offer does not ask to block deposits from mixers. It even says that mixing is 100% legal. The irony is that Swan encourages its clients to engage in financial structuring in order to avoid reporting that is required of them, " noted user LaurentMT.
According to most, the new policy directly contradicts the spirit of the trading platform and the very concept of bitcoin.
Resistance attempts
Despite widespread criticism, Swan co-founder and CTO Jan Pritzker revealed what steps the company is taking to protect user privacy.
"We believe that mixers are OK, privacy is not a crime, and using unmixed bitcoins is like bringing your entire salary to the grocery store to pay for an apple. People should have the absolute right to exchange this salary for individual bills before spending it, so as not to disclose the amount of income to the clerk," Pritzker explained.
The top manager added that such behavior of banks is "expected and obvious", since institutions do not want to do additional work to prove their innocence in the case of real money laundering incidents.
According to Pritzker, for the past two years, Swan has focused on building its own and independent financial infrastructure. However, to accept payments in US dollars, the company must have an MSB license.
At the same time, all such institutions must comply with the rules of FinCEN, FATF and other unelected authorities. Even individuals who exchange currencies through P2P services fall into this category, the CTO stressed.
Licensed financial institutions are required to produce suspicious activity reports, which are required by the Bank Secrecy Act of the 1970s.
"These reports are submitted indiscriminately by banks, because the best option for them is to file a document for protection purposes, rather than delay it and face fines. We believe that this is a violation of the Fourth Amendment, which offers the government the ability to conduct unreasonable searches and arrests of law — abiding American citizens," said the Swan co-founder.
Since bitcoin is still poorly understood in Washington and the media, it easily becomes "a scapegoat for the shortcomings of the system that allows you to stop most real financial crimes," Pritzker explained.
Taking advantage of this situation, US officials pushed through a bill that restricts the use of digital assets and allows the government to oversee most transactions.
A representative of the trading platform clarified that the new rule from FinCEN does not qualify mixing cryptocurrencies as a crime, but requires much more reporting.
To combat such laws, Pritzker suggested teaching the community "the principles of self-defense and privacy." He promised to "continue pressuring the industry" to reduce the amount of KYC data needed to open accounts on Swan.
The co-founder of the platform also advised to recognize the industry's dependence on the banking sector.:
"To resist pressure from banks, we need a large selection of financial institutions willing to do business with bitcoin companies."
In addition, Pritzker stated the need to create specialized state institutions and promote supporters of cryptocurrencies in the government.
Recall that in May 2022, the US Treasury Department added the mixer to the sanctions list Blender.io and the associated bitcoin and Ethereum addresses. The agency claims that the service helped launder funds stolen by North Korean hackers, and was allegedly involved in ransomware attacks.
On August 8 of the same year, the Tornado Cash mixer was sanctioned by the United States on suspicion of laundering more than $7 billion in cryptocurrencies. The service was also used by the North Korean hacker group Lazarus Group.
