Binance warns against use of litecoin’s Mimblewimble privacy feature

Binance announced today that it won’t support litecoin transactions that make use of so-called MimbleWimble Extension Blocks (MWEB), joining South Korean exchanges in shunning the privacy feature.

On May 20, Litecoin developers activated an optional privacy-preserving protocol on the coin. This allows the Litecoin network to conceal transactional data yet maintain its ability to process a lot of transactions quickly.

Last week, several Korean exchanges, including Upbit and Bithumb, notified users of delisting litecoin, saying that MWEB would hinder their ability to keep track of user transfers under anti-money laundering (AML) rules.

While Binance hasn’t taken the delisting route, it did warn users against making litecoin transfers with the MWEB function. The exchange stated that if users made MWEB litecoin deposits into their Binance accounts, it would result in loss of funds. 

Unlike most South Korean exchanges, Binance is not opposed to privacy-centered coins. In fact, it hosts the trading of some of the most popular privacy coins like monero and zCash. So, it’s not necessarily regulatory compliance that Binance has an issue with regards to today’s announcement.

Rather, as per Binance’s statement, it’s the inconvenience of managing litecoin’s MWEB transactions. Notably, it’s not possible to determine the crypto addresses in an MWEB transaction as those are concealed. 

“Any LTC deposits made to Binance through the MWEB function will not be received or returned as we are unable to verify the sender’s address, resulting in the direct loss of funds,” the exchange said.