-
The
European
Union’s
Innovation
Hub
for
Internal
Security
warned
law-enforcement
agencies
that
crypto
platforms
like
mixers,
privacy
coins
and
layer-2
blockchains
can
complicate
tracing. -
In
a
separate
report,
France’s
Autorité
des
Marchés
Financiers
(AMF)
said
crypto
remains
a
high
risk
for
money
laundering.
Privacy
coins,
mixers
and
layer-2
platforms
can
make
it
difficult
for
law-enforcement
agencies
to
trace
funds,
according
to
a
report
from
the
European
Union’s
Innovation
Hub
for
Internal
Security,
a
network
of
labs
supporting
internal
security
organizations
in
the
27-nation
bloc.
The
report,
published
Monday
by
crime-fighting
agencies
including
Europol
and
Eurojust
with
the
European
Commission
and
others,
told
law
enforcement
agencies
they
need
to
be
prepared
to
encounter
those
types
of
tools
in
their
investigations.
Crypto
mixers
have
recently
been
in
the
spotlight.
Tornado
Cash
developer
Alexey
Pertsev
was
sentenced
to
spend
more
than
five
years
in
jail
by
a
Dutch
court
after
prosecutors
successfully
argued
the
platform
was
created
for
money
laundering.
Tornado
Cash
allows
crypto
users
to
exchange
tokens
while
hiding
wallet
addresses
on
the
Ethereum,
BNB
Chain,
Arbitrum,
Avalanche
and
Optimism
networks.
“Mixer
Tornado.cash
has
also
been
using
zero-knowledge
proofs
to
enable
users
to
withdraw
funds
from
the
mixer
without
revealing
what
their
original
deposit
was,”
the
report
said.
“This
significantly
complicates
tracing
the
origins
of
(illicit)
cryptocurrency
for
law
enforcement.”
Privacy
coins
like
Monero
build
privacy
into
their
protocols,
hiding
the
identities
of
the
sender,
the
receiver
and
even
the
money
being
sent.
“Layer
2
solutions
such
as
the
Lightning
Network
might
also
be
abused
by
criminals,”
the
report
said.
“This
can
be
used,
for
example,
to
make
payments
to
each
other
without
making
times
and
amounts
of
these
payments
visible.
Similarly,
new
wallet
encryption
schemes
may
also
complicate
lawful
access
by
law
enforcement.”
Separately,
France’s
Autorité
des
Marchés
Financiers
(AMF)
said
crypto
remains
a
high
risk
for
money
laundering
due
to
its
popularity,
cross-border
nature
and
anonymity
that
comes
with
platforms
like
mixers.
The
securities
regulator
published
its
own
report
on
Monday.
