Binance Blockade of Wasabi Wallet Could Point to a Crypto Crack-Up

Users may find it ever harder to cross the chasm between regulated exchanges and private wallets.

2020 may see crypto's most consequential fork yet: A split between regulated exchanges and privacy-focused users.

If Binance SG's anti-mixing policy holds - especially if it spreads to other exchanges - developers and observers say it could cut the crypto ecosystem in two.

"I think the exchanges are slowly coming to a crossroads," said Gergely Hajdu, a developer with Wasabi wallet.

Mixed on services like Wasabi Wallet to make tracing it hard.

Maxon's firm is developing a tool to help exchanges deal with the FATF's travel rule, an outcome of the June guidance that pushes "Virtual asset service providers" to share reams of customer data - much like the requirements traditional banks face.

Binance's global public relations head Leah Li said in an email statement that its Singapore exchange was following regulators' lead."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 and the user triggered one of its risk control mechanisms," Li said.

"Let's say the exchange takes action against me based only on their assumption that the next wallet is still under my possession. Do we really want the technology corporations to be the arbiter?" he said.

"While mixers themselves are not illegal, we know that stolen funds from hacks and scams are often laundered through mixers. We recommend that our cryptocurrency exchange customers configure Chainalysis KYT to flag large transfers or high-velocity small transfers from mixers for further investigation because it could prevent criminals from cashing out stolen funds."

"Who are you sending this crypto transaction to? What is their name? What is their account number on that exchange?" he said, illustrating how those forms will appear.