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.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 theyafter 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.
Privacy coins like Monero build privacy into their protocols, hiding the identities of the sender, the receiver and even the "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 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 ownin a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence.