The Samourai affair rekindles fears about the sacred right to own your own bitcoins. Let's calm down.
The Scarecrow FBI
The tension has been palpable since the arrest of the founders of the Samourai wallet. Warnings from the FBI even pushed the Phoenix wallet to leave the United States.
We can read in their communicated :
“The FBI has recently carried out operations against cryptocurrency services [Samourai] which were not licensed under federal law. […] Be wary of financial services that do not ask for KYC information, including […] address and identity document (KYC), before allowing you to send or receive money or cryptocurrencies. »
The FBI particularly warns against “cryptocurrency transmission services”warning that their users may be targeted if their bitcoins “are mixed with funds obtained by illegal means”.
This last point refers to what we call “Coinjoins”. Their interest lies in the fact that bitcoin transactions are certainly pseudonymous, but also transparent. Linking an address to an identity means being able to view past and future transaction history.
“KYC” exchanges are typically a potential loophole. Everyone remembers, for example, the scandal Ledger… It is therefore important to “erase” your tracks to protect your privacy by participating in a Coinjoin.
Coinjoin & Privacy
A Coinjoin is nothing more than a transaction bringing together several people at the same time. The goal is to send your bitcoins back to yourself while hiding among a crowd of participants.
The simple principle is that the transaction output amounts are all equal. It is then impossible for a monitoring firm like Chainalysis to know who is who.
The tunnel analogy sums up the principle of a Coinjoin transaction well. Imagine a helicopter shadowing three red cars driving in a specific order. And they change order using a tunnel, out of sight. At the exit of the tunnel, the helicopter no longer knows who is who.
Go to this article to understand everything about Coinjoins: Bitcoin Coinjoin – How does it work?
Unfortunately, it is impossible for an average user to know if criminals are participating in Coinjoin to launder their bitcoins.
A wallet like Wasabi solves the problem by filtering addresses affiliated with criminal activities using the Chainalysis blacklist. Conversely, Samourai prided himself on calling out criminals of all kinds.
Don't overreact
Is this an attack against the possibility of holding your bitcoins in your own wallet? No.
That said, it is true that the FBI press release leaves room for doubt. Does the “transmission” of bitcoins only refer to “Coinjoins”, or does it also refer to wallets?
Accusing the Samourai wallet of being a money transmission company does not hold water. Users are in fact the sole owners of their private keys.
Regarding the Coinjoin Whirlpool service, Samourai was certainly the coordinator of the transactions, but again, users did not lose control of their bitcoins at any time.
The problem is that Samourai charged for its Coinjoin service. According to the DoJ, Samourai collected the equivalent of $3.4 million in user fees for its Whirlpool service and $1.1 million for its Ricochet service.
This is probably why the Phoenix wallet (Lightning Network) withdrew from the United States. Phoenix collects transaction fees (between 0.4% and 1%).
In other words, the right to own your own bitcoins is not at issue in this case. This would call into question the very essence of bitcoin and side with totalitarianism.
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