South Korean Regulators Propose Crypto Mixer Sanctions
South Korean officials are working on introducing regulatory sanctions on cryptocurrency mixers. The regulators have taken a cue from the regulatory agencies in the United States. A local media outlet hailing from the region recently revealed that financial authorities from the country are tailoring new regulations around digital asset mixers.
Regulators hailing from various jurisdictions believe that these protocols are a hub of illegal money laundering. The Financial Intelligence Unit (FIU) is preparing legislation about cryptocurrency mixers.
The article further indicated that financial regulators have initiated dialogue regarding regulatory approaches that could take more time to implement. FIU officials started working on imposing sanctions on crypto mixers after the regulators in the US introduced sanctions against various crypto mixer protocols.
Regulatory Crackdown on Crypto Mixers
The official report of the media has reported that regulators hailing from the Asian region are in the first stages of introducing sanctions against crypto mixers. At the same time, regulators have revealed that members of US regulatory agencies are part of the sanction discussion.
A cryptocurrency mixing service is a sort of fund that is used to remove transaction trails leading back to illegal activities. These services are directed towards the preservation of privacy and hide key details.
Use of Crypto Mixers in Illegal Activities
As per regulators, hackers and scammers often use crypto mixers to support illegal activities such as laundering stolen money. At the same time, a reasonable amount of crypto mixers may be used to launder money or obscure remuneration.
Regulators have been concerned regarding mixers and gambling sites such as processing a considerable amount of illegal funds. On this account, the US government has announced different sanctions against the most famous crypto-mixing protocols that have come into existence during the last few years.
US Treasury Department Introduced Sanctions Against Tornado Cash
The first instance of regulatory sanctions against a cryptocurrency mixer was first introduced in 2022 August. The US Treasury Department announced sanctions against Tornado Cash, one of the most utilized crypto mixing protocols.
In November 2023, Sindbad another cryptocurrency mixer was sanctioned with allegations of ties with North Korea.
However, an article published by Cointelegraph Magazine in July, 2023 introduced investors with Tornado Cash 2.0. The article quotes Matthew Niemerg, co-founder of Aleph Zero, on the matter who talked about ZK-proofs that would allow information access to government and other regulated entities.
The article also cited Jemma Xu, a developer working for Portal Gate who shared plans of working on a Zk-based dark pool that will incorporate Know Your Customer and Know Your Business checks for account verification.
Xu further told journalists at Cointelegraph that dark pools are often used in TradeFi by Wall Street banks to avoid illegal routing of orders ahead of its consumers at centralized dark pools.
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