The FBI released a warning on Thursday concerning the financial risks associated with utilizing unregistered cryptocurrency transfer services. This caution comes in light of potential law enforcement actions against these platforms.

The FBI’s public service announcement focuses on cryptocurrency transfer platforms that operate without proper registration as Money Services Businesses (MSBs) and neglect to comply with anti-money laundering regulations mandated by U.S. federal law.

These platforms are frequently targeted by law enforcement agencies, particularly when utilized by criminals to transfer or launder unlawfully acquired funds, as evidenced in cases involving ransomware payments.

In the PSA published on the Internet Crime Complaint Center, the FBI advised Americans that using services that do not meet legal obligations could lead to losing access to funds following law enforcement operations against these entities.

The FBI disclosed that recent law enforcement activities have aimed at unregistered cryptocurrency transfer services that knowingly participate in illicit transactions or breach the law, underscoring that such services will remain under investigation.

Steps to Avoid Unregistered Cryptocurrency Transfer Services

For individuals considering the use of cryptocurrency transfer services, the FBI suggested taking simple precautions to avoid inadvertently engaging with non-compliant services. These security recommendations include:

• Verifying the registration status as an MSB with the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN).
• Exercising caution with financial services that do not request Know Your Customer (KYC) information before facilitating money or cryptocurrency transfers.
• Understanding that the presence of an app in an app store does not ensure its legality or compliance with federal regulations.
• Steering clear of services that openly endorse illegal activities.
• Exercising vigilance when utilizing cryptocurrency services known to be preferred by criminals for money laundering purposes.

Dismantling of Samourai Wallet’s Unlicensed Money Transmitting Business

The FBI’s warning coincides with the recent crackdown on Samourai, an illicit cryptocurrency transfer platform that offered a crypto mixer service enabling the laundering of proceeds from criminal activities.

Authorities in Iceland seized Samourai’s domains (samourai[.]io and samouraiwallet[.]com) and web servers. Additionally, the Google Play Store removed the Samourai Wallet Android app, which had garnered over 100,000 downloads before the seizure.

The U.S. Department of Justice indicted Keonne Rodriguez and William Lonergan Hill, the founders and operators of the platform, for laundering more than \(100 million from various criminal activities through Samourai’s crypto mixing services, resulting in approximately \)4.5 million in fees.

The indictment disclosed that since the introduction of the Whirlpool service in 2019 and the Ricochet service in 2017, over 80,000 BTC (equivalent to over $2 billion based on conversion rates at the time of each transaction) had passed through these services operated by Samourai.

The DOJ emphasized that despite being marketed as a ‘privacy’ service, Samourai was knowingly utilized by criminals for extensive money laundering and sanctions evasion purposes.