Binance announces withdrawal of support for anonymous Litecoin transactions
Binance withdraws support for Litecoin transactions where the sender's address and transaction details can't be verified. They warn that it could result in loss of funds.
Binance has announced that it will not support Litecoin transactions made through the MimbeWimble Extension Blocks function. The latest Litecoin function allows users to make confidential Litecoin transactions without revealing any transaction information or the sender’s address.
The cryptocurrency exchange stated that any Litecoin transactions made through the MimeWimble Extension Block would neither be received nor returned. It said this is due to its inability to verify the sender’s address and warning that there could be an eventual loss of funds by transacting users.
Binance coming under fire
Binance recently came under regulator’s watch after a Reuters report alleged that the world’s largest cryptocurrency exchange had facilitated at least $2.35 billion in illicit transactions.
Reuters alleged in the report that Binance was utilized as a “conduit” for illegal actors to clean their crypto sourced from hacks, investment frauds, and drug sales between 2017 and 2021.
The report also mentioned that the North Korean Lazarus group laundered some of the proceeds of the 2020 Eterbase hack through the exchange.
Although a Binance spokesperson of Binance termed the report “woefully misinformed,” it adds to the woes of the crypto exchange giant, which is already subject to several investigations.
In February, the United States Securities and Exchange Commission launched a probe into Binance trading affiliates connected to its CEO Changpeng Zhao. The crypto exchange was also the subject of investigations from the U.S Commodity Futures Trading Commission, the U.S Justice Department, and the U.S Internal Revenue Service.
Binance was last year ordered to cease its operations in the United Kingdom by the Financial Conduct Authority. It experienced a similar closure in Canada, which it attributed to Ontario becoming a “restricted jurisdiction.”
Litecoin facing rising concerns
The Litecoin MimbleWimble Extension Block function was activated on May 19, 2022, as a part of a long-awaited upgrade. It was conceived as part of the Litecoin Improvement Proposal to enhance anonymity on the network. Since its launch, however, it has drawn anti-money laundry concerns from several exchanges.
The Binance announcement is coming days after South Korean Crypto exchanges, Bithumb and Upbit announced that they would be delisting the coin.
The crypto exchanges expressed concerns over recent modifications made to Litecoin that allows for greater privacy when conducting transactions. As stated in their notices, the increased privacy users conflict with the South Korean anti-money (AML) regulations.
Gate.io, a crypto trading platform, also announced a similar withdrawal of support for Litecoin transactions made using MimeWimble Extension Block, citing that anonymous transactions are not allowed on the platform.