Trezor to end privacy-enhancing coinjoin feature as Wasabi Wallet steps back

Source: Crypto Briefing

Crypto hardware wallet manufacturer Trezor announced today the discontinuation of the coinjoin feature in its Trezor Suite. The service, provided in partnership with zkSNACKs, the developer of the Wasabi Wallet, will cease by June. Despite the shutdown, Trezor assures users that funds within Coinjoin accounts will remain accessible.

Coinjoin in Trezor will be shut down by 1st June 2024.

We deeply value the privacy of our users, and it is with great regret that we must announce the discontinuation of the Coinjoin feature for Trezor Suite by 1st June latest, as our partner will no longer provide this service.… https://t.co/KgyWIdtV6v

— Trezor (@Trezor) May 2, 2024

Coinjoin is a privacy tool for Bitcoin transactions, allowing users to obscure the origins and destinations of their funds. Trezor was the first hardware wallet to embrace coinjoin transactions. It integrated coinjoin feature into the Trezor Model T in April last year and extended the implementation to the Trezor Model One later in August.

zkSNACKs, in a recent blog post, expressed the decision to end its coinjoin coordination service was made with a “heavy heart” and a need for “legal clarity.” The company said Wasabi Wallet will still offer robust privacy features, such as client-side filtering and Tor integration, even without coinjoin.

The move follows zkSNACKs’ decision to block US citizens and residents from accessing its services, including Wasabi Wallet, due to recent regulatory pressures. This prohibition extends to related websites and services, with IP address blocking already in effect.

Phoenix, another crypto wallet provider, recently announced it would exit the US market due to ongoing regulatory uncertainties. Users are advised to close their channels and transfer their funds before access is terminated on May 5, 2024.

“Recent announcements from U.S. authorities cast a doubt on whether self-custodial wallet providers, Lightning service providers, or even Lightning nodes could be considered Money Services Businesses and be regulated as such,” Acinq, the Bitcoin company behind Phoenix explained its decision.

The exodus follows the SEC’s recent crackdown on non-custodial wallet provider Samourai Wallet and growing scrutiny over MetaMask. The SEC reportedly issued a Wells Notice to Consensys, MetaMask’s parent company. This notice serves as a preliminary warning that the SEC is considering legal action.

In response, Consensys filed a lawsuit against the SEC, choosing to confront the regulatory challenges head-on rather than await further SEC actions. Previously, Uniswap Labs, the team behind the decentralized exchange Uniswap, also received a Wells Notice from the securities agency.

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Author: Vivian Nguyen