Attention: EU Made a Warning About These Altcoins!

A new report prepared by the EU issues warnings for the Bitcoin Lightning Network and some altcoins. The report describes Bitcoin and other layer 2 solutions as “data hiding” technologies. Based on this, he states that it is possible for wrongdoers to abuse these technologies. In this context, the report suggests that layer 2 assays will cause “problems in law enforcement investigations.”

EU report: Bitcoin and these altcoins may cause problems!

The First Report on Encryption, prepared by the EU Homeland Security Innovation Centre, a “collaborative network of innovation labs” in EU member states, found that technologies such as Mimblewimble, zero knowledge (zk) proof, money mixers and privacy coins such as Monero (XMR) and Zcash (ZEC) In addition, he argues that “Layer 2 solutions such as Lightning Network can also be misused by criminals.”

The report states that Lightning Network “will not broadcast the entire processes of two-party multi-signature payment channels to the Blockchain, but will only broadcast the opening and closing of the channel.” Therefore, he notes that Bitcoin and other Layer-2s will cause “problems for law enforcement investigations.”

Crypto mixers and privacy coins are on target!

The report also targets coin mixers such as Tornado Cash (TORN). In addition, it targets confidential coins such as Monero, Zcash, Grin and Dash (DASH). He underlines the use of “zk-proff and layer-2 solutions” that enable hiding some process data. This “makes it significantly more difficult for law enforcement to trace the origins of (illegal) cryptocurrency.”

Mimblewimble, the cryptographic protocol used by cryptocurrencies such as Grin (GRIN), Beam (BEAM), and Litecoin (LTC), is considered a “complicating factor” in law enforcement efforts to trace cryptocurrency transactions. However, the authors of the report admit that “Processes using Mimblewimble are not common.”

Privacy coins come under regulatory pressure from governments As you follow from, the EU’s Crypto Asset Markets (MiCA) framework, which will come into force at the end of 2024, restricts interactions between crypto asset service providers (CASPs) and privacy coins. Thus, it encourages crypto exchanges such as Binance to delist these coins.

Tornado Cash developer Alexey Pertsev has been found guilty of money laundering by a Dutch court. Thus, crypto mixers have also come under pressure from law enforcement agencies around the world. In April, US authorities accused the founders of Bitcoin mixer Samourai Wallet of money laundering. Following this, he took the founders to court and arrested them. Following the Samourai Wallet arrests, several coin mixing services left the United States. Therefore, this pressure had a deterrent effect on other privacy tools.

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