ACINQ, the company that developed the Phoenix Wallet, intends to remove the app from U.S. app stores, effectively preventing users in the U.S. from accessing it after the specified date.
The company has advised its U.S. customers to promptly withdraw their funds. However, it warned against forcibly closing the wallets, as this could result in higher on-chain fees.
Instead, the company suggested that American iOS users access the wallet’s settings page and select “drain wallet,” while Android users should navigate to the settings section and choose the “close channels” command to safely empty their wallets.
While the official reason for removing the wallet from U.S. app stores has not been disclosed, ACINQ hinted in a tweet that recent U.S. government statements have raised concerns about the potential classification of self-custodial wallets, Lightning service providers, or even Lightning nodes as Money Services Businesses, possibly subjecting them to regulation.
The company’s decision follows legal action against the creators of Samourai, a Bitcoin mixing wallet.
Federal prosecutors in the Southern District of New York announced on April 24 that they had indicted Samourai Wallet founders Keonne Rodriguez and William Lonergan Hill.
The indictment accuses Rodriguez and Hill of aiding illegal transactions through Samourai. According to the indictment, Rodriguez faces up to 20 years in prison, while Hill could face up to five years if convicted.
The U.S. Department of Justice alleges that Samourai’s creators enabled over $2 billion in unlawful transactions through the platform, collecting more than $4.5 million in fees since 2015. It is also alleged that Samourai was promoted as a tool for resisting censorship and enabling illicit activities.
Rodriguez’s arrest was accompanied by an FBI warning to users about “operations” on unregistered crypto firms believed to be money services businesses. This crackdown follows a pattern of U.S. authorities targeting wallets and mixers involved in what they consider to be questionable activities.
The indictments have sparked outrage within the crypto community, prompting CryptoQuant CEO Ki Young Ju to defend Rodriguez and Hill. Ju argues that privacy protection is a fundamental aspect of Bitcoin.
He likened the situation to punishing the inventor of a knife instead of the one who misuses it, emphasizing that the legality of using a tool depends on the intent behind its use.
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