PANews reported on June 11 that according to Decrypt, a new EU report specifically pointed out that Bitcoin's Lightning Network and other Layer2 solutions are "data obfuscation" technologies that may be "abused by criminals." The first encryption report released by the EU Internal Security Innovation Center pointed out that in addition to technologies such as Mimblewimble, zero-knowledge proofs, token mixers, and privacy coins such as Monero and Zcash, "Layer2 solutions such as the Lightning Network may also be abused by criminals." The report pointed out that the Lightning Network's "two-party multi-signature payment channel does not broadcast all transactions to the blockchain, but only broadcasts the opening and closing of the channel," and added that it and other Layer2 solutions may cause "problems for investigations by law enforcement agencies."
The report also targets mixers such as Tornado Cash, as well as privacy coins including Monero, Zcash, Grin and Dash. The report highlights that they use "zero-knowledge proofs and Layer 2 solutions" to obfuscate some transaction data, which "greatly increases the complexity for law enforcement agencies to track the source of (illegal) cryptocurrencies." Mimblewimble, the encryption protocol used by cryptocurrencies such as Grin, Beam and Litecoin, is considered a "complication" for law enforcement agencies to track cryptocurrency transactions, although the report's authors admit that "transactions using Mimblewimble are not common."