Bitcoin Lightning Network and Layer 2 Scaling Could Be 'Abused by Criminals', Says EU
The EU report identifies Bitcoin's Lightning Network and layer 2 solutions as "data obfuscation" technologies that could be exploited by criminals. It highlights the potential challenges these technologies pose for law enforcement investigations. The report also targets coin mixers like Tornado Cash and privacy coins such as Monero, Zcash, Grin, and Dash, emphasizing their use of zero-knowledge proofs and layer 2 solutions to obscure transaction data. Regulatory pressure on privacy coins has increased, with the EU's MiCA framework cracking down on interactions between crypto-asset service providers and privacy coins, leading to delisting by exchanges. Additionally, crypto mixers have faced pressure from law enforcement agencies, with developers being found guilty of money laundering and founders of Bitcoin mixer Samourai Wallet being arrested and charged with conspiracy to commit money laundering.
