The Federal Bureau of Investigation (FBI) has issued a warning stating that the use of unregistered cryptocurrency transfer services can result in financial loss if law enforcement takes action against these platforms.
This alert is directed towards crypto transfer platforms that are not registered as Money Services Businesses (MSBs) and do not comply with anti-money laundering measures mandated by U.S. federal law.
Law enforcement agencies often target such cryptocurrency services, particularly if they are being used by criminals to transfer or launder illegally obtained funds.
In a public service announcement posted on its Internet Crime Complaint Center, the FBI stated, “Using a service that fails to comply with its legal obligations can leave you vulnerable to losing access to your funds in the event of law enforcement action taken against these businesses.”
It is important for individuals who wish to utilize such transfer services for cryptocurrency transactions to safeguard themselves against financial risks associated with unlicensed platforms by taking the following precautions:
- Checking to see if the platform is registered as an MSB with the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN).
- Being cautious of financial services that do not require Know Your Customer (KYC) information, such as name, date of birth, address, and identification, before allowing transactions to be made.
- Understanding that just because an app is available on an app store does not necessarily mean it is a legal service that complies with federal requirements.
- Avoiding the use of services that promote illegal activities.
- Being mindful when using cryptocurrency services that are known to facilitate the laundering of funds for criminal purposes.
Details about the takedown of Samourai crypto mixer
The FBI’s warning comes after the recent takedown of Samourai, an illicit cryptocurrency transfer platform that also provided a crypto mixer service, allowing the laundering of funds obtained from criminal activity.
Samourai’s domains (samourai[.]io and samouraiwallet[.]com) and web servers were seized by Icelandic law enforcement. The Google Play Store also removed the Samourai Wallet Android mobile app (which had been downloaded over 100,000 times) after being served with a seizure warrant.
The U.S. Department of Justice has also charged the founders and operators of the platform, Keonne Rodriguez and William Lonergan Hill, with laundering over $100 million from various criminal enterprises through Samourai’s crypto mixing services and collecting approximately $4.5 million in fees.
The superseding indictment states, “Since the development of the Whirlpool service in 2019 and the Ricochet service in 2017, over 80,000 BTC (worth over $2 billion based on the BTC-USD conversion rate at the time of each transaction) has been processed through these two services operated by Samourai.”
“Despite marketing Samourai as a ‘privacy’ service, the defendants were fully aware that it was being exploited by criminals for large-scale money laundering and sanctions evasion,” the DOJ declared.