Wasabi Crypto Wallet Ceases Operations in US Amid FBI Scrutiny

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Key Takeaways

  • zkSNACKs, developer of Wasabi Wallet, has barred US citizens from accessing its services, including websites and APIs, citing recent but unspecified US regulatory announcements as the reason for this exclusion.
  • The crypto community is concerned that this decision may be a response to the FBI's recent warnings for US citizens to engage only with registered crypto platforms adhering to AML and KYC regulations, suggesting Wasabi Wallet's preemptive exit from the US market to avoid potential legal issues.
  • Following the FBI's actions, other privacy-centric crypto services like Samourai Wallet and Tornado Cash have also faced legal challenges, with arrests and platform seizures, highlighting a growing crackdown on crypto mixers and similar technologies by US authorities.

Due to regulatory uncertainty, Wasabi Wallet developer zkSNACKs has barred US citizens and residents from using its services.

zkSNACKs, the developer of Wasabi Wallet, would no longer allow United States citizens to access its products, including using its websites, wallet services, and application programming interfaces (APIs).

This decision was revealed on April 27. The ban blocks all US citizens and permanent residents of the US or “related territories.”

zkSNACKs attributed the shift in access policy for US customers to “recent announcements by US authorities.” However, the company failed to specify what particular announcement triggered the decision, leaving many users confused and their announcement open to interpretation.

This policy shift from zkSNACK has raised concerns in the crypto community. Many enthusiasts speculate that the reason could be linked to last week’s FBI announcement.

The federal agency had warned US citizens to deal only with registered crypto platforms that comply with the existing Anti-Money Laundering (AML) and Know-Your-Customer (KYC) laws.

It’s unclear if Wasabi Wallet has complied with local regulations. Still, the developers have opted for a conservative approach by exiting the market to prevent any future blowback from US law enforcement.

US Crackdown on the Crypto Industry Intensifies

Wasabi Wallet’s announcement and the FBI’s cautionary notice follow last week’s arrest of the two founders of Samourai, a Bitcoin wallet known for its privacy features.

The DoJ accused the founders of laundering $100 million from illicit markets and facilitated the laundering of over $1.7B in funds for criminals.

After their arrest, Samourai’s web servers and domain were seized, and its app was removed from the Google Play Store.

More recently, US law enforcement arrested two co-founders of the Ethereum mixing protocol Tornado Cash.

The founders were accused of facilitating over $1 billion in money laundering through their mixing platform. US government prosecutors, led by US Attorney for the Southern District of New York Damian Williams, alleged that Tornado Cash was a commercial enterprise operated for profit and that its co-founders profited from its operation through their control.

The US government has become increasingly aggressive toward crypto mixers. Last year, the Treasury’s Financial Crimes Enforcement Network proposed designating them a “primary money laundering concern” following the attack on Israel.