Binance to Cease Support for MimbleWimble-Based Litecoin Transactions

Binance will no longer support MimbleWimble-based Litecoin (LTC) transactions – a decision likely motivated by the increasing need to meet compliance standards.

The exchange announced that LTC deposits and withdrawals that use the MimbleWimble Extension Blocks (MWEB) function, which obfuscates transaction information, will not be received or returned. Those who do use the MWEB function will lose their funds.

The decision will upset Litecoin holders, though they do have other means by which they can send private transactions. The MimbleWimble upgrade was introduced to Litecoin earlier this year after years of development.

The move may have to do with the fact that Binance does not want to violate compliance measures and subsequently create conflict with regulators. 

But while options exist for Litecoin users to send private transactions, the number of centralized exchanges supporting the feature is dwindling. 

Governments around the world are concerned about the role privacy coins might play in money laundering. And some, like South Korea, have banned them altogether.

Major South Korean exchanges – including Upbit, Bithumb, Coinone, Korbit, and Gopax – all announced that they would end support for LTC transactions.

It is unlikely Litecoin will go back on its MimbleWimble upgrade. The news led to LTC’s price crashing, down 84% since its high in March 2021.

LTC price slumps, could other privacy tokens follow?

Following Binance’s announcement, LTC’s price dropped by 11%, though it has picked up a little to around $45 at press time. 

Many centralized exchanges still list privacy coins, but change is coming. Lawmakers are bearing down on them, and exchanges are been keen on staying within the law. 

Binance is one of those, hiring former IRS agents and taking numerous steps to meet regulatory standards.

The exchange is facing numerous investigations, including one by the United States Securities and Exchange Commission (SEC) concerning its ICO. It is amidst all of this that it is trying to redouble its efforts on compliance.