Phoenix Wallet, a Bitcoin (BTC) wallet designed for Lightning payments, has announced that it will cease service to US residents starting May 3.
ACINQ, which operates Phoenix Wallet, plans to remove the app from US app stores. This means that from that date, US users will no longer have access to the app.
The company advised its U.S. customers to withdraw their funds without delay. However, we warned against forcing the wallet to close as this may result in higher on-chain fees.
Instead, the company urged US iOS users to go to their wallet settings page and hit ‘Empty Wallet’, while Android users also went to the Settings section and hit the ‘Close Channel’ command to safely empty their wallets.
No official reason has been revealed for pulling the wallet from US app stores. However, ACINQ hinted in a tweet that recent statements from the U.S. government are raising doubts about whether self-managed wallets, Lightning service providers, or Lightning nodes can be considered financial services entities and face regulation.
The company’s decision follows legal action against the creator of Samourai, a Bitcoin hybrid wallet.
On April 24, the United States Attorney for the Southern District of New York announced the indictment of Samourai Wallet founders Keonne Rodriguez and William Lonergan Hill.
Rodriguez and Hill were accused of aiding in illegal trade through samurai. According to the indictment, Rodriguez could face up to 20 years in prison, and Hill could face up to five years in prison if found guilty.
The U.S. Department of Justice alleges that Samourai’s creators allowed more than $2 billion in illegal transactions through the platform and collected more than $4.5 million in fees since 2015. It also claims that Samourai was marketed as a tool to promote censorship resistance and illegal activity.
Along with Rodriguez’s arrest, the FBI warned users about the “operation” of an unregistered cryptocurrency company believed to be a financial services business. The crackdown follows a pattern of U.S. authorities targeting wallets and mixers involved in suspicious activity.
The indictment sparked an outcry in the cryptocurrency community, with CryptoQuant CEO Joo Ki-young defending Rodriguez and Hill, arguing that privacy is a fundamental aspect of Bitcoin.
Joo likened this situation to punishing the person who invented the knife rather than the person who misused it, emphasizing that legality is determined by the intention in using the tool.