One of the benefits of cryptocurrency for many people is the level of privacy it allows on a number of transactions. For example, privacy coins have gained a following by those who want their transactions to be completely untraceable and while this has been controversial due to the use of privacy coins for criminal purposes, the debate continues to rage on. While some people and institutions support the use of tools to ensure the anonymity of crypto transactions, they continue to be controversial and spark heavy debate both within and outside of the industry.
A Binance user recently found themselves in some hot water after a transaction of theirs in bitcoin was frozen by the platform due to his use of CoinJoin, a coin anonymity tool that is attached to the Wasabi crypto wallet.
Frozen and Unfrozen
The saga began on December 19, 2019, when a Twitter user by the name of Catxolotl reported that he had gotten correspondence from Binance in which they stated that they were investigating his attempted withdrawal of a certain amount of bitcoin.
The reason for the investigation of his withdrawal was because of his use of CoinJoin which was later confirmed by a Binance rep.
“Binance SG operates under the requirements as set forth by MAS and our MAS regulated partner, Xfers. Hence there are AML CFT controls set in place for the Binance SG. Unfortunately, this user has triggered one of our risk control mechanisms and thus we are conducting a deeper investigation,” the rep said.
CoinJoin works by mixing together a number of bitcoin transactions on hiding the addresses used to ensure privacy for users. However, regulations mean that CoinJoin might not be ideal for exchange users.
“However, at this juncture, Binance Singapore does not tolerate any transactions directly and indirectly associated with gambling, P2P, and especially darknet/mixer sites,” and email from Binance says.
The user later reported that he had received his bitcoin transaction from Binance but that he was forced to promise that he will not make use of CoinJoin for his transactions anymore and this caused another debate online about with a CoinJoin is ethical to use or if Binance was in the wrong.