On April 26, 2024, Acinq, the French company behind the popular Bitcoin Lightning Network wallet Phoenix, announced that it will withdraw its services from U.S. residents effective May 3, 2024, and remove the app from U.S. app stores. The decision came just days after the U.S. Department of Justice indicted the founders of Samourai Wallet on charges of money laundering and operating an unlicensed money transmitting business, signaling a broader crackdown on non-custodial and privacy-focused crypto tools.
Why Phoenix Is Leaving: ‘Regulatory Doubt’ on Self-Custodial Services
In a statement, Acinq explained: “Recent announcements from U.S. authorities cast 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.” The company said it is removing Phoenix from U.S. app stores and assessing other potential impacts to its operations. U.S. users were advised to withdraw funds before the cutoff: Android users should go to settings to “close channels,” while iOS users should select “drain wallet.”
Acinq also operates the second-largest Lightning Network node, with a capacity of 480.38 BTC (worth approximately $30.68 million) across 2,007 channels.
Crypto Community Reacts: Backlash and Solidarity
The news sparked widespread disappointment and criticism. Alex Thorn, a researcher at Galaxy Digital, lamented on X: “Man, it would be great if the U.S. was still the land of the free.” Bitcoin advocate Mandrik added, “This week keeps getting worse.” Block CEO Jack Dorsey wrote, “Feels completely unnecessary.” Lightning Labs co-founder and CEO Elizabeth Stark agreed, commenting, “Agreed. This is not the way.” Strike CEO Jack Mallers asked, “Has anyone talked to [Phoenix Wallet]? Why was this decision made?”
Some users accused Acinq of capitulation. One X user replied: “This is exactly [what] they wanted you to do, when they indicted Samourai.” In contrast, Lightning wallet provider Zeus Wallet took a defiant stance. Its official account posted, “We’re not going anywhere.” Founder Evan Kaloudis elaborated: “We believe that Zeus is following the letter of the law right now. If the law changes or any judgments are made, we will make adjustments accordingly. If Zeus falls, all other Lightning node operators are next. If Lightning node operators fall, self-custody is next. This is the hill to die on: self-custody. If you don’t agree, you were never in Bitcoin for the right reasons. So get behind us, or go home. Future generations are watching and depending on us.”
Broader Implications: Self-Custody Under Siege
The Phoenix exit follows the indictment of Samourai Wallet’s founders, which many view as a targeted attack by U.S. regulators against financial privacy and non-custodial solutions. The Justice Department’s action, coupled with Acinq’s retreat, signals that regulatory uncertainty is now chilling innovation in the Lightning Network ecosystem—a key scaling solution for Bitcoin. Critics argue that if self-custodial wallets and Lightning nodes are deemed money services businesses, the entire peer-to-peer fabric of Bitcoin could be at risk in the U.S.
As of now, Acinq has not indicated whether services in other jurisdictions will be affected, but the company says it will continue to evaluate the situation. U.S. users can still control their funds through private key exports, but the wallet’s channel management and ongoing support will terminate on May 3.