South Korea to follow US example on crypto mixers with potential sanctions: Report

    2024.01.15 | exchangesranking | 149onlookers

    The South Korean government is reportedly considering imposing sanctions against the use of crypto-mixing services.

    According to a report by a local publication, the South Korean financial regulator plans to introduce new regulations around digital asset mixing services akin to the United States amid the growing use of mixers for illegal money laundering operations.

    South Korea’s financial regulator, the Financial Intelligence Unit (FIU), is reportedly working on legislation regarding using crypto-mixing services. The report noted that the financial regulator has just begun discussions around the need for regulations, which could take some time to come into force.

    One FIU official revealed that the discussions started in Korea when the U.S. introduced sanctions against crypto mixers. The official further revealed that the discussion around new regulations is in the early phase and that the U.S. is part of the discussion.

    A cryptocurrency mixing service mixes potentially identifiable or “tainted” cryptocurrency funds with others to obscure the trail back to the fund’s original source. While these services were launched focusing on privacy, allowing a sender to obscure their key details, over the years, they have become a common way for scammers and hackers to launder stolen funds.

    As a result, there is considerable risk in employing crypto mixers to launder money or conceal earnings. Mixers and online gambling sites have the most severe money laundering issues, and they process the vast majority of dirty currencies. This has prompted the U.S. government to announce various sanctions against popular crypto-mixing service providers in recent years.

    Related: Blockchain Association files support in suit to lift Tornado Cash sanctions

    The first sanctions came in August 2022 when the U.S. Treasury Department announced sanctions against Tornado Cash, a popular crypto-mixing service. Later, in Nov. 2023, the government announced new sanctions against crypto mixer Sinbad, alleging North Korean ties.

    Magazine: Tornado Cash 2.0: The race to build safe and legal coin mixers

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