New crypto sanctions screening tools

Meanwhile the West is trying to close all crypto loopholes that help evade sanctions against the aggressor state, Russia, and its ally, Belarus, Chainalysis is rolling out a sanctions screening tool, while the crypto Tornado Cash claimed to be either helpless or didn't need it to go along with Washington's wishes. In both cases, US law enforcement and intelligence agencies say the Russians, who hope to evade sanctions by using cryptocurrencies, will be thwarted in their efforts. In a Senate select committee hearing on global threats to the United States, attendees, including Federal Bureau of Investigation (FBI) director Christopher Wray, testified to lawmakers. The latter responded directly to a senator's question about how the agency could respond to attempts to use cryptocurrencies to circumvent sanctions. Wray replied that the intelligence community had "built meaningful skills" on digital assets. He noted that the FBI had created what he previously called a "dedicated cryptocurrency team" - his new virtual asset exploitation unit. The unit, the FBI said last month, includes a number of cryptocurrency experts equipped with blockchain analysis tools. The FBI has previously used these tools to find suspicious ransomware distributors and track down what it finds to be part of the tokens hacked by the 2016 Bitfinex raid.

Wray downplayed the role cryptocurrencies could play in evading sanctions, saying that Russia's "ability to circumvent sanctions with cryptocurrencies" was "probably greatly overrated by them and possibly others". He also added that the US "intelligence community" and its "partners abroad" were "much more effective" on the cryptocurrency front than many "appreciate". Wray said: "There is a lot of experience in terms of tools and strategies to help block efforts [to evade sanctions related to cryptocurrencies]. Ultimately, what [Russia] really needs to do is gain access to some form of fiat currency, which becomes more difficult. " Meanwhile, there have been further developments from Chainalysis, which last month seemed to claim to have developed the ability to "sort out Wasabi [Wallet] transactions" made by bitcoin (BTC) and "track their exit to [...] exchanges. of cryptocurrencies. " Wasabi uses “blending” technology which effectively anonymizes transactions by mixing several blockchain movements together at the same time as part of a CoinJoin. In a blog post, Chainalysis asked the cryptocurrency industry to "prove" that it is "on the right side of the story" by supporting the Ukrainian cause and ensuring that platforms - including decentralized finance platforms (DeFi) and decentralized exchanges ( DEX) - were in compliance with the sanctions. He further said that such platforms could do so using his tools, many of which he will distribute for free. Sanctions screening tools for the crypto sector The company explained: “We are announcing the free launch of sanctions screening tools for the cryptocurrency industry. These solutions will allow builders of decentralized Web 3.0 protocols such as DEX, DeFi platforms, DAO and DApp, as well as virtually anyone interacting with cryptocurrencies, to easily validate that they are not interacting with cryptocurrency addresses associated with sanctioned entities. " The company added that its solutions "would provide any cryptocurrency company, protocol or organization with an easy way to quickly check if an address is on a sanction list before allowing it to connect with their service." Tornado Cash: the company "does not need to comply with the sanctions" Bloomberg quoted a co-founder of the Tornado Cash crypto transaction anonymity protocol, Roman Semenov, as saying the company "does not need to comply with sanctions." The project's solution works by “breaking the link between sender and recipient addresses on transactions sent via the Ethereum blockchain network”. The service is based on smart contracts, has no custody services, nor does it have a centralized web host. Semenov said tracking its users was impossible for Tornado Cash, adding: “We have no more access to it than any user. There isn't much we can do. All we do is write the code and publish it on GitHub. This is pretty close to the definition of free speech, so writing the code cannot be illegal ”. Legal experts said regulators are likely to disagree and insist that the creators of the project still exercise sufficient leverage to ensure their platforms comply with sanctions.

You can watch the full hearing of the Senate Intelligence Commission here: cash