According to a report from CoinDesk, the European Union Agency for Law Enforcement Cooperation (Europol) has warned that encryption platforms such as privacy coins, mixers, and Layer 2 blockchains can complicate the tracking of financial flows for law enforcement agencies. The report, jointly released on Monday by Europol, Eurojust, the European Commission, and other agencies, highlights the need for law enforcement agencies to be prepared to deal with these types of tools in their investigations.
Privacy coin mixers have recently come under scrutiny, with the developer of the Tornado Cash mixing protocol, Alexey Pertsev, being sentenced to over five years in prison by a Dutch court after prosecutors successfully argued that the platform was created for money laundering. Tornado Cash co-founder Roman Storm is also facing legal action in the United States. Tornado Cash allows cryptocurrency users to hide their wallet addresses on Ethereum, BNB Chain, Arbitrum, Avalanche, and Optimism networks while exchanging tokens.
Privacy coins like Monero have built-in privacy features in their protocols, concealing the identities of senders and recipients, as well as the funds being sent. The report also notes that the French Financial Markets Authority (AMF) has stated in its report that due to the widespread use of cryptocurrencies, their cross-border nature, and the anonymity provided by platforms like mixers, cryptocurrencies remain a high-risk source of money laundering.
Related reports: “European Banking Authority warns of money laundering risks from privacy coins and self-custody wallets; Binance to delist 12 privacy coins in several European countries.”
