Bitcoin Forum

Here is an another examples of how crypto exchanges are not going to act if they suspect you of using a bitcoin mixing services.

https://twitter.com/RonaldMcHodled/status/1222172084610027523

https://i.ibb.co/dkWNc5s/Screen-Shot-2020-01-30-at-7-58-46-PM.png (https://imgbb.com/)

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Remember back in mid December, someone also reported that Binance freezes his account because he sent it to Wasabi wallet.

https://twitter.com/bittlecat/status/1207621591820951552

This sucks however the easy solution is to send the coins to your own wallet first then why not send them to the mixers?
Yes, the way now they spy on the bitcoin transections is basically killing the beauty of using crypto. There are too many chain analysis company and this industry is getting bigger.

I remember the bittlecat tweet. Looking back at it, it was an amount smaller then half a bitcoin, so I am pretty sure the reason for the flag would have been automatic. I don't see Binance support approving transactions that small personally, it would make sense if it was higher then 20 BTC, or something. I am curious to know how they found out the wallet from just a single address? Via twitter responses: "Wasabi uses a static fee address which would have most likely been the immediate next transaction that the new bc1 address would have been immediately associated with.", it seems like a combination of static fees + previous withdrawals to Wasabi.

Back on topic, it seems that the Wasabi fees have been flagged and is causing an issue for people. However, this response is a bit scary
.
https://twitter.com/RonaldMcHodled/status/1222181343922049025

So it looks like the exchange did post-chain anaylsis, and was able to detect that the user was doing a mixer transaction, even though the first address wasn't even to a mixer? There are no rules against this, and it's pretty shocking that this could have happened - the bittlecat instance is understandable, but this is taking things onto a next level.

Wasabi isn't a mixer... Wasabi is a wallet with an extra feature that allows you to participate in a coinjoin from the gui... It's up to you wether you do this, or just use wasabi because it's an open source, HD, native bech32 wallet with easy tor integration.

The only thing we (as a community) can do is to raise awareness and AVOID exchanges that engage in this behaviour like the plague. I get why they have to implement KYC procedures for anybody that wants to exchange CRYPTO <--> FIAT, but when you want to withdraw said fiat crypto, they have no business with which address you fund. If you fund somebody's address that's engaged in an illegal activity, it's up to law enforcement to ask the exchange for the KYC info, not for the exchange to behave like law enforcement.

EDIT: you're right, OP posted 2 cases: one of a user mixing and one of a user coinjoining with wasabi wallet... I focussed on the latter :)

And also, probably coinjoin the crap out of everyone's coins till we reach the point that pretty much the majority of circulating coins already have been through a coinjoin, hence these exchange really wouldn't have a choice but to accept them.

Apparently this "Bull Bitcoin" exchange has Wasabi Coinjoin integrated in their backend which is remarkable if you ask me. Unfortunately though, it's a Canada-only exchange.

If crypto exchanges include such "anti-mixer" rule in their Terms of service,we have no choice but to follow this rule.With all the regulations and KYC,the crypto exchanges don't want "dirty money" in their wallets,so it's normal for them to ban transactions coming from BTC mixing services,because someone,who uses a mixer service clearly has something to hide.There's no other reason to use a Bitcoin mixer.

Sure there is a choice: don't use those exchanges... Really, if you have a choice between two otherwise equal exchanges: an exchange that will ban you for mixing and an exchange that won't ban you: chose the latter...

There are many good reasons for mixing, coinjoining or switching to a more anonymous coin (like XMR). For example: there are a (very limited) number of people on this forum that have the ability to dox me, Theymos also keeps my ip records on file for a while. I don't want anybody to be able to tie my crypto funds to my physical person, since i don't want my daughter to be kidnapped and helt for crypto randsome.


BTW: this thread wasn't about an exchange not accepting funds that came from a mixer, but about an exchange that locked a user's account because that user coinjoined/mixed using an unspent output from an unspent output that was generated by an exchange...

Okay, please enlighten me here...

Is this how the events happened?
1. From exchange to his private wallet
2. From private wallet, sent to a mixer
3. From mixer, to another private wallet
4. A few days later, he got an email that he violated the terms for sending his btc to a mixing service.

If that is the case, isn't that invasion of privacy already? It's like a bank telling you that you can't deposit your money to any institution that they don't like.

I believe there is a much easier way to bypass those exchanges that are banning your mixed coins.

1 -mix your coins
2 - send them to your wallet
3- send to another address within your wallet again
4- do that 6-7 times until you think it is enough,  always using 1 sat/byte  fees and changing quantities
5 - your coins are clean again.

Any company placing unnecessary barriers in their client's paths are jeopardising their business model.  It's as simple as that.  As others have said, leverage your cumulative power as consumers, vote with your pockets and avoid using those services en masse.  Name and shame.  Tell other people to avoid using them.  Don't simply bend over and take it.  Your privacy is worth fighting for.

Privacy features are currently being developed at protocol level as well, so any exchanges engaging in this practice are likely going to face some pretty interesting quandaries once those are implemented.

Behavior like this is yet another reason I am so glad I don't use any centralized exchange. The very fact that users have even received an email like this means the exchange is performing blockchain analysis on your coins both before they reach the exchange and after they leave it, which should be enough on its own to turn any sane person off, even without their draconian rules regarding where you can and cannot send your coins to. Not content with invading your privacy, collecting all your personal details and KYC documents, selling your info to third parties, and taking control of your coins, the exchanges even want to dictate what you are allowed to do with your own money.

These exchanges are starting to behave more and more like fiat banks. They are starting to become antithetical to bitcoin's very purpose.

Trade decentralized.

There's always been the capacity to mark coins with a tag that others can use to identify those coins down the road.  They are refereed to as coloured coins - I would have preferred them to be called by another name, but I'm sure alt coins hadn't been dreamed up at that time.  I haven't heard many people talk about coloured coins for a while now.

People should be aware of the rules their exchanges are implementing if they are not, they will be in trouble sooner or later, like this rule they can get your account in trouble you should follow their rules if you want to sent it to a mixer just do so after you sent it to your wallet, soyou will avoid penalties.

That's great, especially I love the accident that happened in this screenshot. Why? Because when you use mixer, you have to feel confident that your privacy is protected and if they are easy enough for exchanges to catch, then this means that mixer was just piece of shit. When exchange can detect that you used "famous" mixer, that hugely affects your privacy.
Bitmixer did very correct thing, owner of that mixer wasn't stupid to shut down huge money making machine for nothing. He earned a lot of money and when understood that he wouldn't be able to last that long and protect his and customers privacy, decided to shut down his service.
Would love to see what will happen around other mixers, what will come: a new trend or new shutdowns?

Well, I expected this to happen. It's just that it's too early to show up in the forum. The sense of Bitcoin is really starting to vanish. I find it hard to accept that we couldn't do anything we wanted with our Bitcoin even though we have the private keys. Perhaps the solution we have right now is to have clean money. AML isn't really a bad thing though it just needs to protect the people from the dirty money. A person wouldn't need to use Mixer if their Cryptocurrency assets came from a good deed or something clean. Probably that is how it works.

It's going to be a cat and mouse game, so it ever a mixer shutdowns, a new one will come in with new algo's and stuff.


To be honest, I didn't see this coming, I mean we all know that if we used tumblers or conjoiners we "thought' that we're safe. Anyway, the best thing to do is to just stay away from exchanges like this one, and as others have pointed out, DEX should be answer.

I agree, and it's unfortunate that some exchanges do this.  Coinbase is notorious for closing customers' accounts if coins are sent to gambling sites and probably other ones as well.  I'm not sure if they're required to do this by their government regulators or if they're doing it as a precaution, so they don't get linked to criminal/shady activities themselves.  Regardless, it sucks.

Never heard of Paxos, but I'd definitely avoid them if I were looking for any services they offer.  Most exchanges don't do what Paxos and Coinbase do as far as I know.  I've never heard stories of Kucoin, Binance, or any of the bigger exchanges tracing where their customers' funds are going once they're withdrawn. 

Everybody is condemning this but nobody has stated maybe there is some negative impact associated with users sending bitcoin to the bitcoin mixer. If not one or two centralized exchange is doing this, then there should be a cogent reason for this and by the way, I do not think Binance will query users for this if it is not stated explicitly on their term of service. I believe this is part of the thing that differentiates the centralized exchange platform from the decentralized one, so if you wanna use the centralized exchange, you gotta follow their T&C. I use coinbase a long time ago but when I heard the news about them blocking the account of users that send a coin to a gambling site, I heard to switch to bitpay wallet.

The exchange should send this notification to all their traders and investors, they will be surprised to find this out later, many traders are in fact doing this, and although ignorance of the law or rules excuses no one, at least these exchanges will do their part to warn their users or else they will be blame for not sending a notification.

And this is how control is slowly imposed, step by step.

To users wondering why would they block coinjoin/mixer transactions when you can transfer the BTC to your own wallet, they're probably doing so because when you send coins coming from a mixer to your wallet, they both link and your identity could be found.

It's just like I suspected in a thread (https://bitcointalk.org/index.php?topic=5175238.msg53740164#msg53740164) I've posted earlier on the forum. These are all absurd consequences of trying to keep your identity to yourself, because your information is worth hella lot of money.

Regarding the tweet from the OP, if I was the person in that situation I would not answer them anything and I'd immediately cease using my account through their platform. It's not their business what we're doing with our money after it leaves their platform, is it?

You yourself have put "dirty money" between quotation marks, why then are you normalizing their behaviour?

And there's nothing wrong in wanting to maintain some privacy.

https://en.bitcoin.it/wiki/Privacy#Examples_and_case_studies

I hate all of this. I guess that's the way to find out if your mixer was worth anything to begin with. I guess you can just swap coins with somebody from another part of the world, probably give them a small tip and then use one of these snoopy snoopy compaines.

It's only natural that they would start doing this. All of those money services licences from the government come with strings and chains attached. The good part is that unlike banks, we can take our funds into our sole and exclusive ownership. Hopefully with the lightning network anonymity will increase drastically.

That is bad news for everyone who prefers privacy and that is utter bullshit as everyone needs privacy to safe guard our asset and how come the exchanges come to know that the funds are indeed sent from mixers, do they have a team to monitor every transaction and identify from where they arise, these are actually not good news for anyone who prefers privacy as i do not want anyone to monitor my source funds which is my hard wallet and i am yet to come across this obstacle. If someone could come up with a list of exchanges that restrict mixing service that would be great.

i agree in spirit, but we're sadly entering an era where bitcoin exchanges are increasingly being classified (https://www.fincen.gov/sites/default/files/2019-05/FinCEN%20Guidance%20CVC%20FINAL%20508.pdf) as financial institutions (ie banks) and money transmitters by governments. the FATF (which is really just a front for the USA government) has also been pushing its "risk-based approach" to AML/CFT (http://www.fatf-gafi.org/media/fatf/documents/reports/Risk-Based-Approach-Banking-Sector.pdf) quite hard.

whether we like it or not, proximity to so-called "risky" services (according to chainalysis: P2P exchanges, mixing services, high risk exchanges, and gambling sites) is therefore a problem for compliant exchanges:

https://i.imgur.com/3hVFXNs.png

so we should expect exchanges to increasingly target the low-hanging fruit and close their accounts. that's the mission of the FATF's "risk-based approach"---to get financial institutions (and now bitcoin exchanges) to stop doing business with "risky" customers.

besides gambling sites, wasabi wallet coinjoins are probably one of the lowest hanging fruit of all. (https://bitcointalk.org/index.php?topic=5212738.msg53456100#msg53456100) until the implementation is less obvious, i don't recommend using them. use a mixing service with superior liquidity and less obvious algorithms.


both cases = wasabi wallet. :-\ https://twitter.com/RonaldMcHodled/status/1222195787112673281

If I am in those situations, I will send my bitcoin to another wallet, and then I will send it into mixing services. That will solve the problem without they know that we send the bitcoin to the mixing. The other way you can do is convert your bitcoin first into an altcoin, send it into another wallet for that altcoin but which support converting back to bitcoin. The exchanges will think that you send the altcoin to another wallet, but they don't know if you turn your altcoin to bitcoin and send it into the mixing services.

You can use a separate wallet that doesn't connect to another exchange, so they cannot do anything if, finally, they know that you send it to the mixing services. I hope that can help us to solve the problem, but I am sure that perhaps, another exchange will send an email to you because of sending it to the mixing services.

Exchanges has been alarmed by increasingly used of bitcoin mixers by the purpose of illegal acts. We should respect exchange's platform in the first place. If one should insist of transferring btc to a btc mixer, then find another exchange that allowed it. Or you can simply transfer it to a personal digital wallet before transferring to a btc mixers. There's always a way. We knew that bitcoin mixers reputation nowadays was not that good because of the previous issues.

I see far to many people defending the exchanges engaging in these behaviours in this thread... Really... I'm astounded that the general consensus isn't shunning these exchanges and making a public list as to which exchanges should be avoided at all costs.

I tought about a relatively analog situation... It's actually the other way around from the post made by the OP, but it's equally valid.

The situation
Person A sells guns on openbazaar accepting BTC
Person B sells his kid's second hand toys on openbazaar (a digital garage sale) accepting BTC

Since openbazaar uses a HD wallet for the seller, the buyer (that can potentially be law enforcement or a criminal) is now able to follow the trail of unspent outputs untill they are exchanged on one of the many KYC exchanges. If the buyer is Law enforcement, they are now able to get a warrant and tie the identity of the seller to the sale. In case the buyer is a criminal, he can wait untill the exchange is hacked, he can hack the exchange himself, he can blackmail an exchange operator, he can bribe an operator,...

Bottom line is that, as a seller, it doesn't matter if your client is the police or a thief, you have to be realistic and know that in the future, it might be possible for either seller to find out how much BTC you hold and where you live.

In case of the gun seller, this is good if law enforcement can tie his identity to his sales (so they can arrest him)... In case for the garage sale it's VERY bad (since the thief now knows how many BTC person B holds, and knows where he lives).

Now, i hope i've made my point that both person A and person B have added benefit when mixing, coinjoining or exchanging to an anonymous coin. I hope this makes it clear that it's NOT the act of mixing/coinjoining/exchanging is illegal. There are, in fact, perfectly legal reasons to mix/coinjoin/exchange. It's NOT up to the exchange to lock users because they want privacy. It's up to law enforcement to track illegal gun sellers down, and only get warrants for people that are doing illegal stuff. An exchange, even if it's looked upon as a financial institution, is NOT a valid form of law enforcement. They do not have the right to meddle, track, block, ban,... The only thing they are allowed to do is keep the KYC information SAFE untill law enforcement comes around with a legal warrant to request this information. A warrant based on concrete evidence that the person that's being investigated has a high probability of having done something illegal, a warrant signed by a judge.

If exchanges are forced to do act like law enforcement by the law of the country they operate in, we should switch to exchanges that are located in countries where the laws aren't completely retarded. If exchanges took it upon themselfs to play "world police" they should be dropped, shunned, avoided, sued,...

Would you like it if you FIAT bank decided to block your account because you worked for a brewery, and since drinking and driving is illegal, they no longer accept the money of people that have anything to do with alcohol or tobacco? Would you be OK if they blocked your bank account because they saw you walking out of a pub at night? Would you be OK if they blocked your account and did not want to release your money before you gave them an absurd amount of personal information? Would you be OK if they plain blocked your account and did not give you any way of getting your money back????
The answer is: NO, you would not be OK... If this happened to you, you'd be searching a lawyer by now, you would have contacted the newspapers, you would be calling your relatives to withdraw all their money from said bank... Why on earth do people think this behaviour is not OK with FIAT, but perfectly fine with crypto?

if you're using wasabi wallet for coinjoins, that's probably not good enough. in fact, the first example in the OP (https://twitter.com/RonaldMcHodled/status/1222195787112673281) put multiple hops between his exchange withdrawal and the coinjoin. he still got flagged.

Apparently, we know that bitcoin is hard to control or manipulate especially with a third party that will put up some restrictions to what people could freely do with their funds and wallets. But it is evident that they are now making their step to somehow regulate the transaction of bitcoin, because mixing it will provide the best option for the user to stay anonymous, maybe this is their initial step to tax trading profits of most of the users, basically to avoid them being free which turns out to be alarming as it removes the freedom we should have in the first place. So, in my opinion, decentralized bitcoin exchanges will be our future hopes.

Seems like part of their KYC and AML regulations. And while it's good for detecting suspicious activities, smaller amounts shouldn't been filtered out.

However, one problem in this method is that a criminal could just split up his withdrawals on smaller amounts, therefore bypassing the threshold at which the withdrawal is blocked.

One basis of exchanges for blocking transfers to mixing services might be the total amount of holded Bitcoins of an account.

Whichever case it might be, just send it first to your own wallet, then you can freely send it to the mixing service. You'll just sacrifice a few fees, but knowing you have more than enough bitcoins, it wouldn't really hurt your wallet.

Unfortunately, it appears that because coins can often be feasibly tracked, Bitcoin has on numerous occasions been lauded for its transparency, and because the user has to go out of their way to maintain a semblance of privacy, we have arrived at this place where strict surveillance is slowly becoming something most have gotten used to. Changing the direction we're heading to might be difficult, unless Bitcoin/wallets undergo some serious changes.

Things are really getting to another level ;) you will only be having this kind of problem when you’re making use of centralized exchanges, and most people in the cryptocurrency community are making use of these exchanges which means they are probably dominating the space. I hardly see people that use decentralized exchanges, you wouldn’t have this kind of problem when making use of DEX.

I don’t make use of coin mixers, I haven’t used them for once, because I don’t even have a reason to do so. People I have heard that are using are mostly hackers and scammers, and of course people that wants to stay pretty much anonymous.