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Another Crypto Exchange Discourages the Use of Bitcoin Mixing Services

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The cryptocurrency exchange Binance was recently scrutinized for flagging a customer’s funds because the individual had used a bitcoin mixing application. Now the platform Paxos Global is discouraging the use of crypto mixers after a customer allegedly sent coins to a mixing service.

Also read: Regulatory Roundup: EU-Wide Crypto Regulations, New Rules in Europe, US, Asia

Paxos Global Discourages the Use of Bitcoin Mixers

The fight for privacy against corporate entities and governments surveilling our everyday financial transactions continues to escalate. Cryptocurrencies have made it harder for governments to track people, with digital currency mixing services thwarting blockchain analysis. However, exchanges have been increasing their surveillance methods a great deal and a number of them have beefed up KYC practices. Last December, news.Bitcoin.com reported on a Binance customer complaining after his funds were frozen because he used a bitcoin mixer. Eventually, the Binance user received his funds but only after promising not to utilize bitcoin mixing services. “I got my [satoshis] back, but not without promising Big Brother I wouldn’t mix those UTXOs,” the Twitter account Bittlecat remarked. He added:

It is really sad that [Coinjoin] is seen as criminal activity, and I’m glad that we are discussing this.

Paxos Global has discouraged the use of bitcoin mixers when the exchange wrote a message to the Twitter user Ronaldmchodled asking if he sent funds to a transaction mixing service.

Following the issues with Binance, another trading platform has been accused of following the same blockchain surveillance practice. Paxos Global customer @Ronaldmchodled said he got a message from Paxos asking him to state where he had sent his BTC withdrawal. Paxos Global told Ronaldmchodled that the firm noticed the funds were sent to a mixing service. “Apparently you are not allowed to do what you want with your bitcoin once you own the keys,” Ronaldmchodled tweeted on January 28. “Fortunately that’s not how Bitcoin works, but the level of chain analysis here is alarming. What is the correct response?”

Paxos Global’s official Twitter account did respond to Ronaldmchodled’s tweet. “Sorry if we were unclear — We wouldn’t necessarily outright deny service to someone who has used a mixer, but we do monitor for alarming patterns,” Paxos replied. The trading platform added:

As a regulated financial institution, it is within our responsibility to ensure that our customers are not engaged in money-laundering or other illicit activities. We do our best to follow AML/KYC standards for this type of institution. Please contact us if you’d like to discuss further. DM or email.

Invasive Transaction Surveillance Grows Under New Regulations

Of course, many bitcoiners spoke up when Paxos Global responded and tried to ask the business questions. “Why not take a stance to fight for bitcoin and join companies like Bull Bitcoin fighting to protect bitcoin’s fungibility?” asked Brad Mills. Matt Odell questioned if the exchange “[Paxos Global] was actively flagging all suspected Coinjoin usage or just Wasabi usage? Do you have a public policy on this posted anywhere?” The Paxos Twitter account did not respond to further questions after discussing the matter with Ronaldmchodled.

“No compliance team will ever explain what they do, otherwise it’s a recipe for anyone on how to bypass,” one individual tweeted in response to the questions. “This is true in all domains and especially the financial sector since ever, way before crypto.”

The crypto community is not too pleased with the amount of transaction surveillance and harsh KYC guidelines these days. Cryptocurrency trading platforms and exchanges are dealing with strict regulations from governments this year. In Europe, exchanges have to implement more KYC/AML solutions because of the 5th Anti-Money Laundering Directive (AMLD5). And in the U.S., trading platforms are subject to the FATF-driven regulations which were recently applied to digital assets. At the same time, cryptocurrency users are trying to make bitcoin transactions more private and projects like Wasabi and Samourai are improving regularly. Alongside this, Bitcoin Cash (BCH) users are excited about Cashfusion which offers a better anonymity set than traditional Coinjoin transactions.

What do you think about Paxos Global discouraging users from leveraging bitcoin mixers? Do you think there are more exchanges other than Paxos and Binance that participate in transaction surveillance tactics against mixers? Let us know what you think about this subject in the comments section below.

Disclaimer: This article is for informational purposes only. It is not an offer or solicitation of an offer to buy or sell, or a recommendation, endorsement, or sponsorship of any products, services, bitcoin mixing wallets or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article. throughout


Image credits: Shutterstock, Paxos Global logo, Fair Use, and Twitter.


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The post Another Crypto Exchange Discourages the Use of Bitcoin Mixing Services appeared first on Bitcoin News.

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