In another case of tightening KYC procedures, BINANCE seems wary of the usage of the Wasabi wallet. The exchange has warned traders for withdrawals to a service that could potentially allow the mixing and obscuring of coins.
A user noted that the Binance exchange also had a way to track which wallet was used for withdrawals. After noticing a transfer to a Wasabi wallet, the exchange demanded additional information on the trader’s profile.
https://twitter.com/bittlecat/status/1207621591820951552
So far, mostly deposits have been suspicious, based on the origin of funds. Exchanges are still not required to prove all the origins of all the coins, and tracking is sporadic. However, after 2020, new requirements may boost reporting and add more data to each user profile.
Binance, which is based in Malta, will have to comply with a stricter set of rules, the AMLD5, which comes into force in about 20 days. This may involve direct blockchain tracking, to follow the origin of coins and tokens.
Binance started off as a free-for-all exchange back in 2017. But over the years, the market placed a series of restrictions, starting with ICO sales after the ban in China. This year, Binance spun off its US-based business, while also keeping a list of countries with a total ban on trading. The gathering of KYC data also played a bad joke on Binance, when passport information ended up in the hands of hackers.
The exchange required significant disclosures for higher-tier trading rights, but actual wallet censorship has been unknown. Binance, however, cited current laws in Malta for the need to temporarily lock the user account.
The usage of coin mixers is seen as going against the philosophy of AML laws. The EU has taken special effort to track and disable mixer usage, as coin usage can be linked to illegal activities or terrorism financing.
But the crypto community saw the event as firstly, a threat to coin ownership, where exchanges are capable of holding back BTC withdrawals, even for initially innocent reasons. The other problem was the threat that privacy would disappear entirely in 2020, if any exchange is used to transfer coins. So far, peer-to-peer transactions remain legal and do not require special reporting.
