Tezos (XTZ), a prominent blockchain platform known for its self-amending capabilities and decentralized governance, has increasingly come under scrutiny due to its utilization in potential money laundering schemes, particularly through cross-chain exchanges. Since its ICO in 2017, which faced allegations of securities law violations, Tezos’s blockchain has been exploited for illicit activities, including complex layering and obfuscation of funds via decentralized exchanges that support atomic swaps and wrapped tokens across multiple blockchain environments. These activities enable the transfer of illicit funds through sophisticated cross-chain pathways, greatly complicating detection efforts and raising concerns among regulators in France and globally. Despite the platform’s efforts to implement AML compliance solutions, such as those offered by Coinfirm and other analytics firms, its utility in laundering operations persists, driven by the pseudonymous nature of blockchain transactions, its widespread adoption, and the decentralized structure of its ecosystem. Investigations and legal actions, including class actions and regulatory probes in the United States and France, have aimed to hold entities accountable, but the anonymous, borderless nature of Tezos-based transactions continues to pose significant challenges for enforcement agencies seeking to combat money laundering and related financial crimes on a global scale.
Since its inception, Tezos (XTZ) has been subject to scrutiny for its Initial Coin Offering, accused at times of unregistered securities sales and inadequate transparency regarding investor funds. Although not a laundering instrument per se, XTZ has been used occasionally in laundering via decentralized exchange-enabled cross-chain swaps, leveraging atomic swaps for fund obfuscation. French regulatory authorities have intensified AML investigations across crypto platforms, with indirect implications for Tezos trading, while enhanced AML analytics platforms now comprehensively monitor Tezos transactions to prevent illicit financial flows. The case underscores the ongoing challenges in enforcing AML compliance in novel decentralized crypto ecosystems, especially in France’s regulated landscape and globally.
