Bitcoin Forum

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Mixers attract this kind of malicious activities so I guess that they should be held responsible for their actions. But I believe that they should have a lighter sentence because it's not like they have a really big involvement with the laundered money or illegal funding.

I honestly wouldn't be surprised if Mixing services get pushed and threatened by authorities. But as for now, it seems that all the issues are in the United States (as far as I know). I really won't really be surprised if mixing services get pushed to the dark web sometime in the future.

Mixers have been under threat since 2017, either they are being pressured to shut down their services or government agencies criminalising them, so this is no surprise specially coming from the US.

So this has set a precedence already way back, so it's just a question on what tumbling services will be the next target. And since bitcoin is on a bull run, US government is stepping up against bitcoin mixing service again.

First Bitcoin “Mixer” Penalized by FinCEN for Violating Anti-Money Laundering Laws. (https://www.fincen.gov/news/news-releases/first-bitcoin-mixer-penalized-fincen-violating-anti-money-laundering-laws)

Mixers has always been under threat, there are few reputable mixers closed because they think their time is almost up or stopped by government (e.g. the operator arrested or take control over the server). This is one reason why CoinJoin gaining popularity.

I am sure it's not the first time crypto mixers are under threat from the authorities. In past we have seen such actions on few other crypto mixers like Helix and Coin Ninja. There could be more and I am sure such kind of actions will continue to surface every now and then.

Cryptos and privacy coins are really a great headache to the financial regulators around the world. So I don't see such actions stopping at any point of time.

Not the first time these news come to be known these days. There have been other mixers as well as far as I know that behaved maliciously recently. It's risky to use those services for as long as they aren't fully automated via smart contracts.

Mixer owners aren't responsible for each mix but they've facilitated anonymous mixing and it's possible criminals used it. Governments clamp down against mixers could've started years ago because they're options for criminals to launder money, it's happened with Bitcoin Fog so others could be next.

Not really surprised with this news. Those who have been around here may remember about what happened to Bestmixer.io. The operators were arrested and jailed for aiding money laundering and other criminal activity. The authorities can never be comfortable with any sort of Bitcoin mixing mechanism. It goes diametrically against their goal of tracking each and every financial transaction in this planet. Anyway, I would say that it is good that for now they are concentrating on the mixers. But I am afraid that they will go after the Dex sites, once they are done with the mixers. And the mainstream exchanges may be next.

I think this depends on a country and its regulations. The US is known to treat BTC quite strictly, and I wouldn't be surprised if mixers are already illegal there. To be honest, I haven't seen any research on who actually users mixers and for what. I think that to make decisions like banning mixers or limiting their operations, there must first be research available that proves they're mainly used for illegal purposes. I've never used mixers because I haven't felt the need to do it, but I'm also not sure that they're mostly used to serious criminals.

There's a good chance that it's simply just because it's not on their radar yet, knowing that it's a safe assumption that only a very small minority use mixing services. Of course, I could be wrong.

This is the document that has been filed (13 pages long):
https://www.courtlistener.com/recap/gov.uscourts.dcd.230456/gov.uscourts.dcd.230456.1.1_2.pdf

The agent behind the investigation depicts the facts that he found, that support the three charges. A few key points:
-   Bitcoin Fog has been active since 2011.

-   Even though there is a clear site for visibility, the service seems to be Tor based.

-   Over 1,2M BTCs have been mixed through the service (chain-analysis forensics data).

-   They identify as the largest senders through the service Agora, Silk Road, Evolution and AlplhaBay.

-   The site was originally announced … on Bitcointalk (see https://bitcointalk.org/index.php?topic=50037.msg596034#msg596034). Reading through, it’s clear that the officer in charge read all the related posts on the forum (warning for others).

-   An undercover direct TX was sent to the Mixer in September 2019, and on November 2019 another controlled TX, being the latter originated from an undercover account on Apollon darknet market. They also sent a message to the admin to indicate that they were going to mix BTCs obtained through illegal activity.

-   Sterlingov used the same email on his Bitcointalk account, as that to register the mixer domain. He paid for the domain using a Liberty Reserve account (a Costa Rica currency Exchange). The document depicts how they linked that to a Mt. Gox account (multiple steps in-between), and yes, they got access to IP logs to help tie things around (Liberty Reserve and, apparently Mt.Gox). Also records from Google were used in the loop…

So information dating back nearly a decade ago, and some sweet collaboration, managed to identify Sterlingov, and tie him to the Mixer…

There will always be mixes they will be just opened on anonymous name/onion domins if this come to this point.

Exactly what I was going to say.

Coinjoins are just an open source software. Authorities cannot open source software, they cannot control people coding at home.

They cannot control where I store my bitcoins, and if I use some software like coinjoin we can still have some privacy.

I guess, but take note that reputation isn't something that people could replicate. People wouldn't use just some random service that just popped up, just as how people probably wouldn't immediately use a newly released wallet software.

They are plenty of reliable mixers on onion domain rn those unlikely to be shut down.

I knew that one day it would come to this point. Mixers were created to allow people to make their bitcoin transactions more private and anonymously but somehow bad actors took advantage of these services for their shady activities. If authorities are out to get mixing service providers then I think, this should serve as a warning to other mixing services. The first step to create an anonymous service is to be anonymous yourself. Too bad for Bitcoin fog owner. He'll be charged with multiple counts. I'm not sure how the authorities plans to sort out users of such services.

If Bitcoin is not money like United States regulations claims but Security and virtual currency, how can someone be charged for Money Laundering when no money was involved, but just mixing of coins?
Privacy is basic human right and people will always work on solutions to make Bitcoin more private.

Funny thing is that only way they could do something like this is with some undercover agents pretending to ask for help or private message communication, something we often see in bitcointalk forum.
You can see that charges are for Money Laundering - STING operation, and I don't think that Sterlingov was very smart with choosing to live in United States so that was big risk from his side when he was not a US citizen.

I don't think that Coinjoins are much better solution for privacy especially when Bitcoin fees are higher, and they can always create some malicious code update for wallet and pretend they are good contributors.
Yesterday I found out about interesting wallet called Mercury (https://mercurywallet.com/) that still in early stages, that have statechains for transfering private keys in a safe way without fees, and I tested it for the first time with small amount of testnet BTC.
Maybe something like this will be used in future for mixing and swapping coins.

Interesting and other news, which was also posted on this forum. The FBI also uses mixers to hide transactions with confiscated bitcoins.
While the authorities openly state that mixing contributes to crime, the FBI itself does not hesitate to use them. https://news.bitcoin.com/report-claims-fbi-bitcoin-mixers-btc-forfeiture-processing/

I have posted it before and I'll say it again.
Mixers are for people too lazy to do something themselves.

Do you want to "mix" your bitcoins. Go ahead it's simple, go to this site and they will do it for you.

Want to do it yourself, yes it's more work but it can be done.
1) Find an open public Wi-Fi
2) Register for an anonymous email account
3) Setup an account with an exchange that has fairly liberal KYC
4) Setup another account with another exchange that has fairly liberal KYC
5) Send coins to 1st exchange, exchange to another coin, send to 2nd exchange, exchange back to BTC, withdraw, done.

If the 1st exchange has XMR or another somewhat anonymous cryptonight coin you can do 2 accounts at the same exchange BTC -> cryptonight -> send to local wallet -> send back to 2nd account at exchange -> withdraw.

Never used a mixer or did the above, never saw any reason to, but it's not that difficult.

Side thought, makes you wonder if some of the exchanges that people say have faked volume are just a bunch of bots doing the above. Doubt it, but you never know.

-Dave

It was a matter of time to see this happens. I always asked myself how those services can be legal because any under who sends their coins to mixing services is because he has something to hide...

The thing here is that users don't have to register on that service to use it, they only have to send the coins and provide the address where they want the 'clean coins', so, it will be kind of hard for the govs to trace the users who are washing their coins.

Both accounts should also be created under different email addresses. But it can all be in vain, exchanges etc. often share information between one another.

Your method for an alternative to using mixers is good but it'll break if exchanges freeze the account and ask for identification documents. I've never used mixers before but if I had to I'd prefer using your approach with desktop Electrum wallets for ease in withdrawal if I had to do it.

To a point yes, but there is still a record of you talking to an exchange somewhere for the 1st transaction. If the VPN provider ever gave up their records then it's a small & unprovable data point but you can see someone talking to exchange "X" on this VPN from this persons location and then some coins moved to that exchange.

If you pay for your coffee and bagel in cash, except for some GPS records in your car / phone there is no proof you went to the bagel shop for breakfast and used their Wi-Fi



Never heard of that. Guess that is why XMR and other privacy coins can be handy. Any discussion on the forum about it?


And a mixer can run & scam at any time too, this way if you do your own research you can find some *somewhat* trustworthy exchanges.
Not saying you are going to not get burnt at some point in time.

-Dave

Not sure if it was discussed anywhere on bitcointalk but it's easy for an outsider to deduce that they're doing it with all the source of funds questions that are popular in conjunction with the proliferation of blockchain analysis services being used by so-called VASPs. Even Binance has been using them for couple years now.

Your way of using exchanges is good but exchanges reserve the right to ask for identification documents, mixers don't ask. I've heard about mixers that scammed so it's all about doing proper research to find trustworthy exchanges or mixers. If more mixer owners are arrested on suspicion of criminal activities it's going to get very interesting.

Holy shit, I don't know what to say about this kind of thing, they are really hypocritical in terms of enforcement of the law, I really wanted to side with the law against mixers/tumblers but this news even though a speculation made me change teams real quick.

Your mistake here is expecting the US government to be consistent. They will apply whichever rule(s) benefit(s) them most at the time. Consistency or even obeying the law is irrelevant.

This is possible, but there are significant additional risks over using an established mixer. Either or both exchanges could freeze your accounts and demand KYC at any time, meaning you either lose your coins or you make your privacy significantly worse. Exchanges share records with each other, share records with blockchain analysis companies or even employ blockchain analysis companies, and share records with governments and associated agencies. Exchanges look backwards from deposits and forwards from withdrawals for several transaction to track where money has come from and where it is going.

So what about the bitcoin mixer services which are not US based and U.S. authorities will not be able to take any action against it. You can run an anonymous bitcoin mixer service and avoid any kind of plenty.
Also, if all the bitcoin mixer services are stopped, you can still do money laundering through exchanges which allow you to deposit withdraw without KYC.

That's my take on the issue of using mixer too, I think that there is no other reasons besides doing something shady even if they say that it is for privacy, how private do you want your shit to be? Bitcoin is pseudonymous enough for someone to not get tracked online.

International laws or treaties are irrelevant to the US government. We are the world police, after all.

Nonsense. There is a difference between having nothing to hide and having nothing you want to share publicly.

If privacy is irrelevant to you, then I'm sure you'll be quite happy sharing your real name, address, email address, phone number, bank statements, and internet browsing history publicly in this thread. No? Then what do you have against people not wanting their entire bitcoin transaction history to be public knowledge?

this is a question equal to the question of possession of weapons. some people argue that civilian people cannot have weapons, that weapons should only be with the military and the police because the number of crimes could be frightening if everyone has weapons, with mixers it's the same, we can't think that when someone creates a mixer the goal was to want criminals to use the mixer, but we also can't deny that criminals are supposed to be the mixers' biggest customers.


so we have to think: will mixers do more good than bad?

how many honest people mix many bitcoins? how many criminal people mix bitcoin?

I do not agree with KYC, it is unfair, it is not fair that we have to do KYC for sites where the owners are anonymous, this is unfair and wrong

Money laundering can easily be done in bitcoin mixer, that's part of the risk, in fact, there are already a lot of bitcoin mixers that have close their business due to this big threat, but we can't deny that there are still mixers operating until now, we just have to be aware of the risk and make use of their service while they are still operating.

The thing is, the government wants to treat every business that deals with money as a bank, that they can be regulated through their centralized policy.

Absolutely not true. The best data we have from Chainalysis says that only 8% of funds passed through mixers are from illicit sources, which is a far cry away from being mixers' "biggest customers".

Undeniably. If you make privacy illegal, then only criminals will have privacy.

From the same report from Chainalysis, the most common source for funds sent to mixers is directly from centralized exchange. So mixers' biggest customers are actually honest users who simply don't want exchanges spying on them and linking all future transactions back to their personal data.

I don't want to be the fanboy but you might want to read up on privacy (hey maybe even the Cypherpunk Manifesto or the one from ProjectVRM) then perhaps you might gain insight and perspective on why some people believe that protecting your privacy goes beyond your rights, but is in fact, your duty to yourself and to society.

I don't need to hide a lot of things myself, and choose deliberately not to, for purposes of obeying the laws of the jurisdiction I reside in.

But I also choose deliberately to keep private some things I don't want the whole world to know.

Privacy isn't secrecy.

Thanks for outlining this. I am sure authorities have a whole horde working on getting an overview about the crypto world. It is still a question of manpower and I guess they can't hunt everyone down but focus on the guys that play an important role in one way or another. As you described it they carefully build the puzzle over time, subpoenaed companies like Google to nail it down with full certainty. The internet knows it all.

I’m amazed mixers are still operating after all this time. It seems like they have got to be high on the list of regulators looking to shut down sketchy operations. I assume those remaining are probably operating out of interesting locations or doing their best to remain anonymous. I think it would be pretty safe to assume that regulators will be trying everything they can to arrest operators of high volume mixers as well as attempt to unmask their user base.

The similarity on how they caught him and how they caught Ross Ulbricht are the same, because both of them used their email to register domains or centralized services that could be linked to their real identity.  ::)

How difficult can it be for these people to get "throwaway" email addresses? In any way, to answer your question... " if Mixers are under threat?" ... Answer : Yes, definitely.

Do you think for one moment governments will not hunt down people running a mixer service that are used for criminal actions? (The owners of these sites cannot say, they did not know people are using their sites for criminal actions)

Will he be extradited to the US? No. I am also curious on what will happen with "DarkSide" (supposedly a Russian group) ....when the US can pin them for the Oil pipeline ransomware attack. (Was this government sanctioned?.. they say no.)  ???

The court hasn't even determined his fate yet.

I honestly don't think that running a bitcoin mixer per se would be breaking any laws in most countries - all you're doing is redirecting transactions on a public network. Obviously, the operation of a mixer can attract nefarious individuals with which the problem lies.

I also don't think that existing players in the mixer market would care too much. They have too much incentive to keep going given the volume of mixing they receive on the daily, and most have probably prepared substantially for any run-ins with law enforcement anyway.

If you function like a money transmitter even if it is only by redirecting funds in exchange for a fee I think you can get into trouble in a lot of countries. The prosecutors will find ways to bend their law such that you do function like a transmitter. If a person comes to you in real life and gives you a suitcase with $100,000 and says hey bring this to that address and I'll give you some reward, I am not sure which laws exactly you break but I know you would be in trouble.

I do see the same thing and for sure those mixer owners out there are really ready for that probability even though this talks about redirecting or some sort but still you would still get involved.

We have seen mixers closed its doors voluntarily and there are still which had been operating until today but we wont know on when would the time comes where government
would really be breaking or knocking off their doors to get involvement.

Wont really be surprised if one day we would really be seeing these kind of news pops out unexpectedly.

The issue is if you are operating a mixing service it is almost inconceivable that you can manage to stay anonymous. You would have to take care of every single detail and just one mistake is enough to reveal who you are.

I might be late in this thread but it is just a common idea that any government would prohibit companies and businesses that lets people be anonymous with their transactions. US government is only concerned that they cannot track people with huge profit from cryptocurrencies especially if they use tons of mixers for their holdings and transactions. Hence, if a country is developing laws and regulations with cryptocurrencies and its holders/users, then it is a clear no doubt that mixing can gain a little spotlight on the way.

TBH, mixing can only be helpful for treasurers who love to hodl their BTC for a very, very long time no matter the price, but they don't want other people to know/trace their transactions to their fresh addresses where they want to hodl their coins. Or it can be helpful to those who want to hide their money from their government. No doubt it can also be helpful to other dark deeds committing people which I won't like to discuss, but I believe they will hardly keep any money in BTC because its value gains and drops a lot and their deals can't wait for such gains to recover their losses.

The fact is, a person needs to know and understand how much private is normalcy and how much private is too much private for them. If privacy means everything for someone, there's no doubt they won't give a damn to the transaction fees (paid to miners) and would still use mixers to privatize their funds, but if they simply want to abide by their jurisdiction, then they may not go with this and will simply keep doing what they had been doing before.

Nah, the way it works is, it would be a scam if any other bitcoiner in the town does it but it's not a scam if Elon Musk does it because the latter would bring more taxes to the government right? This is the unfortunate truth of the capitalistic society.

I guess the only option the guy has now is to hire the best lawyer in town. They will I guess be liable but the case could be lighter I can tell.
Let us say that they attract people that want to launder money but it doesn’t mean that they have mixers for that purpose. If executed well, the lawyer might be able to save the person.

Authorities have been eyeing these mixer services since then. FBI was using as well to liquidate some of their possessed Bitcoins and I feel bad about it.

Well, things have time to end and mixers are about to end as well. They were wrong when they opened the service in the public. I could have the services offered to the sharks if I were them.

I can't remember exactly where I read that but when some guys from a decentralized exchange got under fire the approach to defend themselves was supposed to be dealing with "freedom of speech" and that writing code is not against the law per se. It's like writing code for a virus is not against the law, but executing is. As the developers from that DEX haven't executed anything, they wanted to go down that route. They just provided the code and others used it.

In this case, how actively involved is the provider of a mixer? Is he actively contributing in the background in order for the mixing process to be facilitated?

Then they should probably be turning their attention to banks, who are responsible for laundering trillions of dollars of money annually, far more than mixers ever will. But no, they get a free pass because they buy out our politicians.

VPNs across the world are undoubtedly used by some people for criminal actions (whether or not that is a smart idea is a different conversation), but yet they are allowed to continue to function, run ads on social media and TV, some are even operated by companies trading on various stock exchanges, etc.

If they shut down mixers because of nonsense "money laundering" accusations, then they will also try to shut down every non-KYC exchange, every instant coin exchange/swap service, every non-KYC sportsbook, casino, gambling site, etc. Any address or transaction which can not be linked to a real name and identity becomes blacklisted.

The whole thing is nonsense.