On Thursday, Binance user Catxolotl took to Twitter to warn other Coinjoin users that the crypto exchange had frozen their funds for employing the privacy tool while attempting to withdraw bitcoin to a Wasabi wallet.
Not surprised that my transactions are tracked, it’s KYC after all
But I’m very concerned that Binance knew I was sending to wasabi, when all I input was a bc1 address, nothing more pic.twitter.com/T6ePjahESY
— Catxolotl (@bittlecat) December 19, 2019
Coinjoin adds an extra layer of anonymity to bitcoin transactions by grouping and “mixing” unspent transaction outputs and obscuring the exact nature of sends and receives. Changpeng Zhao, CEO of Binance, replied to Catxolotl’s tweet, explaining that Binance Singapore operates under regulations that prohibit the use of tools like Coinjoin,
Binance SG operates under the requirements set forth by MAS and our MAS regulated partner, Xfers. Hence there are AML CFT controls set in place.
Not something for us to decide.
I believe they have already reached out to the you to clarify and explain. Cheers.
— CZ Binance (@cz_binance) December 20, 2019
Catxolotl pushed back on the response, condemning Binance for not further explaining the regulation or providing a warning. The social media user said that he understand Binance was just following rules and wasn’t “blaming ALL the blame on you or even Binance Singapore, you guys were just playing the game.” He added, however, he is disappointed “as one of the big exchanges you guys didn’t do anything before.”
Catxolotl later updated the Twitter chain confirming that they had received their frozen funds after promising to no longer use Coinjoin.
Update: I got my sats back, but not without promising Big Brother I wouldn’t mix those utxos. Hope everyone got something out of this pic.twitter.com/1FP12R4tA9
— Catxolotl (@bittlecat) December 20, 2019