As the Bitcointalk administrator predicted, the landscape became really dangerous for operators of bitcoin mixers. The federal governments around the world, and in particular Joe Biden’s administration, took it upon themselves to destroy any sort of semblance of privacy on Bitcoin. They openly started going after anyone running a service providing privacy of Bitcoin transactions, notlimited to bitcoin mixers, seizing infrastructure left and right, in the hopes that all Bitcoin users would just store their sats on PayPal or something.
Using warrants, police, and strongly-worded statements, they used all of their abilities to directly or indirectly take down many privacy services. As I am writing this, they are targetting more infrastructure as we speak. We should be greatful that this website, and bitcoin mixer lists in general, are protected by the First Amendment, though.
EU’s Failed Attempt To Outlaw Crypto Transactions
First, however, it was the European Union who tried to outlaw peer-to-peer Bitcoin transactions. In March of 2024, they were discussing a law that would require any peer-to-peer transaction with a value over €1000. Predictably, there was a lot of uproar about this in the crypto communities, and those provisions of the bill were killed later that month.
Had the bill passed, it would’ve had a catastrophic effect on crypto businesses, effectively spelling the end of many businesses that do not have (or don’t want to have) the resources and infrastructure for identifying everyone. It would have led to the centralization of all services to a few giant providers, who most likely do not care about user experience and ultimately excluding the unbanked class from using their services, as verification often requires a bank statement or utility bill anyway.
FBI Seizes Samourai Wallet
On April 24, 2024, the FBI took away the servers hosting the Samourai Wallet website, their coordinator, and their apps and arrested the two founders of Samourai Wallet, whose names are Keonne Rodriguez and William Lonergan Hill. This was actually quite devastating news, not only because privacy advocates have lost one of the most private wallets to date, but because I had actually interviewed them while creating this website.
The FBI alledges that Samourai Wallet was used to launder over 100 million dollars, and that the two founders were personally responsible for that, since the government had no interest in actually tracking the money launderers themselves. They have been released on bail pending trial.
I do not believe that they had received a prior warning from the government prior to the takedown, because if that was the case, they would not have continued updating their warrant canary. It had received regular updates before this event. The takeaway from this is that the governments really don’t care whether you explicitly state that money launderers and other types of criminals are not allowed to use your platform. If they see that you are not a business and you are not demanding KYC information from everybody, they will just swoop in and take you down, warnings be damned.
US Government’s Advisory On Non-Custodial Wallets
The very next day, the FBI posted this warning to its website about using non-KYC crypto services. To quote: “The FBI warns Americans against using cryptocurrency money transmitting services that are not registered as Money Services Businesses (MSB) [...] avoid cryptocurrency money transmitting services that do not collect know your customer (KYC) information from customers when required.”
Even though the state of identity verification in cryptocurrency services is woefully inadequate as I have already explained earlier on this page, it is apparently much easier for them to demand that every wallet and program collects the documents of all Bitcoin users, and then destroying the services who don’t comply. It certainly sounds easier than, you know, actually going after the money launderers and criminals on the darknet, right?It would not surprise me one bit if a private citizen is paying for them to destroy Bitcoin privacy, in a similar way to how Ripple’s creator was caught paying Greenpeace to attack Bitcoin.
Wallets Block US Users
If the goal of the FBI advisory was to spread FUD - Fear, unrest, and disruption - into the minds of Bitcoin users, then it certainly worked. The developers of many pieces of Bitcoin software rushed to ban Americans from using their software, as if that will actually save them from the Feds (see the previous section for more details). Alarming reports of Phoenix Wallet and Wasabi came out, stating their intent to ban all US users from accessing their software. This basically means IP restrictions will be put in place, while the apps themselves will be pulled from US app stores. For the record, though, most wallets held their own.
Wasabi CoinJoin Shuts Down
Apparently it was not enough for zkSNACKs to merely block US persons for accessing Wasabi Wallet entirely, but they felt the need to decommission their coordinator entirely. Thus, on May 2, 2024, about a week after the FBI seized Samourai Wallet, zkSNACKs announced that it would shut down the Wasabi Wallet coordinator by the first of June that year. This completed a stunning u-turn from its intent to implement UTXO blacklisting made two years prior. It turns out that not even filtering is going to appease the government of money laundering concerns with bitcoin services.
In the days that followed, a new wallet software called Ginger Wallet was made, which is compatible with Wasabi Wallet. Unfortuantely this software is also blocked for US users, the reason being that nobody knows the government’s stance on coinjoins yet. (Edit: As of 2025 they have finally allowed US users to use their software.) Also independent, a community-ran coordinator called OpenCoordinator was created, without such restrictions.
Edward Snowden: Final Warning for Bitcoin
In the midst of all this chaos, Edward Snowden highlighted the importance of Bitcoin to natively gain privacy-enhancing capabilities:
“I’ve been warning Bitcoin developers for ten years that privacy needs to be provided for at the protocol level. This is the final warning. The clock is ticking.”
Edward Snowden (Source)
Tragically, in direct opposition to Snowden’s post, the Bitcoin developer community has since decided that protecting the right to embed binary data is more important than embedding privacy directly into Core. Hope is not lost however, as I have full faith in the rest of the community to step up and try to invent ways to make Bitcoin more private.
As I was writing this section, the crypto world was rocked with news that LocalMonero and its other site Agoradesk were going to shut down on November 7, 2024.
Roman Storm
While Snowden was waiting nervously for the Bitcoin developers to make Bitcoin more private (prior to them throwing their full weight behind datacarriers), The US Department of Justice (DoJ) was making moves too. They put the Tornado Cash developers on trial, but thanks to an outstanding amount of community donations not only from people like Vitalik Buterin but also from grassroots privacy projects, the project won a ruling in their favor. Unfortunately, justice is not blind, and Roman Storm, one of the developers of Tornado Cash, was convicted for running that service.
The moral of this story is that if you are a large American corporation, you have enough lobbyists, and you make enough money for various government regulators, then they will look the other way. Unfortuantely, almost no privacy project can afford such bribes.
I would like to be very clear about this, and it’s that nobody would have a problem with any of this if the law was applied equally. It is not though, and you can get away with a lot more things if you have lobbyists in Washington D.C. than without them. This includes banks and crypto exchanges, both of which have allowed their own services to be used for money laundering without repercussions. (Particularly KuCoin, a once-celebrated no-KYC exchange. Shame on them!)
Other Justice Department Actions
The EU also passed MiCA regulations at the end of 2024 that aim to tighten their grip on crypocurrencies.
Somehow, the people who were running Sinbad were located and arrested by authorities, who in their official statement made concealed shots at Bitcointalk.org.
The increased pressue exerted by the DoJ with those other events forced Bitcointalk to take proactive measures to tighten its mixer ban.
