Services for US users of Phoenix Wallet come to a halt.
Phoenix Wallet, a Bitcoin wallet designed for Lightning payments, has announced that it will no longer be available to residents of the United States starting on May 3.
ACINQ, the company that developed Phoenix Wallet, plans to remove the app from U.S. app stores, effectively preventing users in the U.S. from accessing it after that date.
The company has advised its U.S. customers to withdraw their funds as soon as possible. However, they have cautioned against force-closing the wallets, as this may result in higher on-chain fees.
Instead, the company has urged its American iOS users to navigate to the wallet’s settings page and select the “drain wallet” option. Android users are advised to go to the settings section and choose the “close channels” command to safely empty their wallets.
The official reason for removing the wallet from U.S. app stores has not been provided. However, ACINQ hinted in a tweet that recent statements from the U.S. government have raised concerns about the potential classification of self-custodial wallets, Lightning service providers, and Lightning nodes as Money Services Businesses, which could lead to regulatory challenges.
This decision by ACINQ follows the legal action taken against the creators of Samourai, a Bitcoin mixing wallet.
On April 24, federal prosecutors in the Southern District of New York announced that Keonne Rodriguez and William Lonergan Hill, the founders of Samourai Wallet, had been indicted. Rodriguez could face up to 20 years in prison, while Hill could face up to five years if convicted, as they are accused of facilitating illegal transactions through Samourai.
The U.S. Department of Justice alleges that over $2 billion in unlawful transactions were conducted through the platform, with the creators collecting more than $4.5 million in fees since 2015. It also claims that Samourai was marketed as a tool for evading censorship and enabling illicit activities.
The arrest of Rodriguez was accompanied by a warning from the FBI to users about unregistered crypto firms believed to be money services businesses. This crackdown is part of a larger trend where U.S. authorities target wallets and mixers involved in activities they consider questionable.
The indictments have sparked backlash from the crypto community, with CryptoQuant CEO Ki Young Ju defending Rodriguez and Hill. Ju argues that privacy protection is a fundamental aspect of Bitcoin and compares the situation to punishing the inventor of a knife instead of the person who misuses it, emphasizing that the intent behind using a tool determines its legality.
In related news, a British law agency has gained enhanced crypto seizure powers.
