- Cryptocurrency exchanges in a dilemma on anonymity focused platforms such as CoinJoin, Whirlpool and other wallet apps.
- The extensive growth of these apps calls into action KYC-focused exchanges that flag such transactions on their platform.
- Privacy-focused cryptos such as Monero (XMR) and Dash (DASH) also facing the axe from crypto exchanges.
Over the past few months, cryptocurrency exchanges have been flagging transactions from Bitcoin (BTC) mixers such as CoinJoin in a bid to combat illegal transfers and money laundering on the platform. However, this raises privacy related issues with as an increased number of cryptocurrency users opt using these platforms to ultimately enjoy their privacy.
Recent statistics published by Matt Odell on Twitter reveals the growth of Samourai’s Whirlpool Wallet over the past year showing the increasing use of these privacy based mixers. How should crypto exchanges react to the growth of these BTC mixers and privacy based cryptocurrencies?
Whirlpool records over $10 million in Bitcoin transfers
Samourai’s Whirlpool wallet experienced its highest monthly growth since July 2019 (launched in May 2019) recording 65% volume growth rate with the service processing more than $10 million worth of Bitcoin (BTC). March saw the highest volume processed on Whirlpool – 1523 BTC ($10.6 million, as at time of writing) – a cumulative spike through the first three months of 2020.
The cumulative BTC processed by Whirlpool has breached the 5,000 BTC mark his April as user privacy concerns rise by the day.
What should exchanges resort to?
KYC focused crypto exchanges are facing a dilemma in the current state as more users decide to use the BTC mixers. While several exchanges have waged war on such transactions either flagging them or stopping them, a crypto based lawyer believes this cancels out even the good players who are not malicious. Rafael Yakobi, the Managing Attorney at ‘The Crypto Lawyers' said,
“But at some point soon each exchanges are going to decide, either officially and publicize it or off the record, on how they’re going.”
“I’m hoping that what they [exchanges] will go for is that if they don’t have any reason to believe that anything suspicious is happening, besides the fact they could tell that the transaction resulted from a CoinJoin, that shouldn’t be enough to treat the transaction as suspicious.”