Key Takeaways
- The developer, zkSNACKs, attributed the decision to “recent announcements by U.S. authorities.”
- ACINQ expressed concerns surrounding the potential classification of self-custodial wallets as Money Service Businesses (MSBs)
In a surprising move, ACINQ’s Phoenix Wallet and zkSNACKs’ Wasabi Wallet have announced they will no longer be available to users in the United States.
Wasabi Wallet announced the ban on April 27th. The developer, zkSNACKs, attributed the decision to “recent announcements by U.S. authorities.” In a blog update, the team stated, “An IP address blocking for U.S. residents is effective on wasabiwallet.io, api.wasabiwallet.io and zksnacks.com”.
Phoenix Wallet, developed by ACINQ, followed suit, announcing they would discontinue services for US customers. ACINQ expressed concerns surrounding the potential classification of self-custodial wallets as Money Service Businesses (MSBs) in the wake of recent regulatory actions against other crypto companies. Phoenix Wallet users have until May 2nd to withdraw their holdings.
The latest developments come amidst an increase in regulatory scrutiny from US authorities towards crypto wallets and mixers. On April 10th, Consensys, the MetaMask wallet creator, received a Wells notice from the Securities and Exchange Commission (SEC) regarding its MetaMask Swaps and Staking features. The SEC alleged Consensys was operating as an unregistered broker-dealer.
Earlier this month, the US Department of Justice charged Samourai Wallet founders Keonne Rodriguez and William Lonergan Hill with conspiracy to commit money laundering. The federal prosecutors alleged that theydeveloped, marketed and operated the mixer, which aided over $100 million in money laundering transactions from illegal dark web markets.
The US Treasury Department has also been targeting crypto-mixing services. In April, they added Tornado Cash, a prominent mixer, to its Specially Designated Nationals list, effectively prohibiting Americans from using it.
In September 2023, Tornado Cash Developer Roman Storm pleaded not guilty to all allegations and was released on a $2 million bond shortly after being arrested. He is currently barred from leaving New York, New Jersey, Washington, and California. Storm’s attorneys has however attempted to dismiss the indictment in late March, alleging that officials lacked probable cause to accuse him.
