FBI Cautions The Public About Unregistered Crypto Money Transmitters

Jimmy Aki
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The US Federal Bureau of Investigation (FBI) warned Americans on April 25 regarding using cryptocurrency money-transmitting services that are not registered as Money Services Businesses (MSBs).

FBI Continues Fight Against Illegal Exchanges

The FBI made a public service announcement to advise citizens to use registered Cryptocurrency Money Services Businesses that comply with the existing Anti-Money Laundering (AML) and Know Your Customer (KYC) laws.

KYC is a process used by financial institutions and businesses to verify the identity of their customers. The goal of KYC is to prevent money laundering, fraud, and other illicit activities by ensuring that customers are who they claim to be. KYC procedures involve the collection and verification of personal information such as name, date of birth, address, and government-issued identification documents.

The FBI also warned that the availability of an app in an application store does not guarantee its legality or compliance with federal requirements. The US investigative agency disclosed it had recently conducted law enforcement actions against cryptocurrency services operating without proper licensing.

“People who use unlicensed cryptocurrency money transmitting services may encounter financial disruptions during law enforcement actions, especially if their cryptocurrency is intermingled with funds obtained through illegal means,” the FBI added.

Additionally, the law enforcement body advised individuals to verify the registration of crypto money-transmitting services as a Money Services Business (MSB) with the US Treasury Department’s Financial Crimes Enforcement Network (FinCEN) before using them.

To protect traders and investors, the FBI urged individuals to report any instances of fraudulent or suspicious activities to its Internet Crime Complaint Center section.

Could This Be The FBI’s Strategic Crackdown Against Crypto Mixers?

This alert by the FBI has sparked mixed reactions within the cryptocurrency community. While some view the agency’s actions as a protective measure for residents, the majority see it as a tool used by the US government to restrict financial freedom and target crypto mixers.

Bankless co-founder Ryan Sean Adams highlighted the types of services that would fall under the FBI’s designation of a Money Services Business (MSB).

He also questioned the FBI’s enforcement tactics, suggesting that developers and users of cryptocurrency wallets and code could be unfairly targeted and labeled as MSBs. This could be seen as a criticism of the FBI’s actions, implying that they are overreaching in their efforts to crack down on illicit activities involving cryptocurrencies.

It could be recalled that the US government has intensified its crackdown on crypto mixers in recent years.

In October 2022, addresses linked to Tornado Cash mixer were added to the list of “Specially Designated Nationals,” prohibiting US residents from using the service. This resulted in the indictment of all three co-founders of Tornado Cash by August 2023 for laundering $1 billion and violating sanctions.

Recently, the US Department of Justice (DOJ) arrested the founders and CEO of Samourai Wallet, a prominent privacy-focused Bitcoin wallet and mixer, and charged them with laundering “more than $100 million in criminal proceeds.”

The DOJ also seized Samourai’s web servers and domain and issued a seizure warrant on the Google Play Store for its mobile app.

Crypto exchanges have also been in the eye of the storm of the regulatory authorities in the US, as firms like Binance were indicted by the Department of Justice (DOJ). This led to the stepping down of its former CEO, Changpeng Zhao, with a severe consequence for its subsidiary, Binance.US.

About Jimmy Aki PRO INVESTOR

Based in the UK, Jimmy is an economic researcher with outstanding hands-on and heads-on experience in Macroeconomic finance analysis, forecasting and planning. He has honed his skills having worked cross-continental as a finance analyst, which gives him inter-cultural experience. He currently has a strong passion for regulation and macroeconomic trends as it allows him peek under the global bonnet to see how the world works.