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U.S. authorities are cracking down on the cryptocurrency market with new rules on opaque transactions, as pressure mounts in Washington to curb links between digital tokens and illicit funds following Hamas attacks on Israel.
The Treasury Department announced late Thursday that it plans to increase the transparency of transactions through so-called virtual currency mixing services to combat what it called “serious money laundering and national security risks.” Mixers obscure the traces of cryptocurrency ownership and payments.
The move comes as a bipartisan group of senators in Washington called on the Biden administration to curb illicit cryptocurrency activity that could evade U.S. sanctions or be used to fund armed groups. It was done a day later. Following Hamas' attack on Israel earlier this month, politicians have renewed focus on the potential link between cryptocurrencies and illicit funds.
Israeli authorities have closed more than 100 accounts on Binance, the world's largest cryptocurrency exchange, suspected of having ties to Hamas. It is also focusing on more than 150 online donation drives supporting Hamas, Palestinian Islamic Jihad and other groups, the Financial Times previously reported.
“More broadly, Treasury actively combats abuse of all aspects of Treasury. [crypto-mixing] It is the destruction of the ecosystem by terrorist organizations, including Hamas and the Palestinian Islamic Jihad,” said Wally Adeyemo, Undersecretary of the Treasury.
An August analysis by crypto analysis group Elliptic found that crypto wallets associated with multiple suspicious Middle Eastern groups have historically relied on the same crypto exchange platforms to attempt to exchange cryptocurrencies for sovereign currencies. It turned out that there was.
The US financial crime watchdog FinCEN says that if a financial institution “knows, suspects, or has reason to suspect” that it is involved in exposure to cryptocurrency mixing services within or outside US jurisdiction, He said he would like to require reporting of information on transactions. .
“Similar to our efforts in the traditional financial system, [the] Treasury will work to identify and eradicate its illegal use and abuse. [crypto-mixing] ecosystem,” said FinCEN Director Andrea Gacki.
In recent years, the United States has targeted cryptocurrency mixing services because they mix payments that can typically be tracked on the digital ledger that underlies cryptocurrencies.
Last year, the Treasury Department's Office of Foreign Assets Control (Ofac), which enforces economic sanctions, accused Blender.io and Tornado Cash of helping launder more than $7 billion in cyber heists by North Korean-backed hackers. Two mixing services were targeted. .
In January, the company publicly identified Russia-based cryptocurrency service Bitzlato, which is suspected of transferring millions of dollars in illegal cryptocurrency funds in violation of U.S. money laundering regulations.
