Bitcoin mixers become more and more popular for the darknet

[LeGaulois]

Since exchange platforms bother people and become more strict with regulations, darknet users are abandoning this path and turning to mixers.
The volume of bitcoins sent by darknet entities to mixers increased from 1% in 2019 to 20% in 2020. (x20). The volume of bitcoins received by darknet entities from these mixers tripled over the same period. (x3)
Today it's about the darknet, tomorrow we will have a lot of other use cases...





https://crystalblockchain.com//articles/darknet-use-and-bitcoin-a-crypto-activity-report-by-crystal-blockchain

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[o_e_l_e_o]

A large increase in traffic to and from mixers, and a large decrease in traffic to and from centralized exchanges. I don't find this surprising at all. As time goes on, centralized exchanges are more and more turning themselves in to self appointed judge, jury, and executioners for people who use them. They track the movement of your coins long after you withdraw them from the exchange, and they look back at the history of your coins long before you deposit them at the exchange. If they don't like what they see, your account is locked and there is nothing you can do about it. If you perform some arbitrary "suspicious activity", your account is locked and there is nothing you can do about it. If you deposit too much too quickly or withdraw too much too quickly, your account is locked. I'm sure that plenty of coins that have touched a darknet entity have been locked, frozen, or seized as soon as they touched a centralized exchange, but this isn't just the case for darknet entities. There are centralized exchanges policing perfectly legal bitcoin usage, such as to and from casinos and gambling sites.

We will continue to see the popularity of mixers and other privacy enhancing techniques such as CoinJoin and PayJoin increase as time goes on.

[suchmoon]

We will continue to see the popularity of mixers and other privacy enhancing techniques such as CoinJoin and PayJoin increase as time goes on.

Didn't some exchange try to ban a CoinJoin user as well? Technically they could target Chipmixer chips too and possibly some other mixers if they wanted to. We might need to resort to mining our own fresh bitcoins.

[o_e_l_e_o]

Didn't some exchange try to ban a CoinJoin user as well?

I didn't know that, but after a quick search it seems that Binance did indeed freeze accounts a few months ago of users who had used CoinJoin transactions. Look at this twitter thread for example: https://twitter.com/bittlecat/status/1207894540322926593. His account and coins were only unfrozen after he "promised" to stop trying to protect his privacy.

Seriously, this is insane. User takes basic steps to afford himself the smallest bit of privacy after already completing full KYC at an exchange, and the exchange literally confiscates his money until he promises to let them stick their noses in to everything he does, every transaction he makes, everywhere he sends his own money.

Why do people use Binance again? Is this level of surveillance worth it to trade shitcoins?

[LeGaulois]

(Well, half of my post is missing above, fu*k )

The problem with Coinjoin is people do not use it correctly (if I can say) it is recommended to add extra hops, like what Ricochet does. 12 extra hops and you're good to go.
Binance isn't the only one to do it btw, but so far I've never heard the same story with a mixer. To me, they're shooting themselves a bullet in the foot for the long run.

Can you believe? Some platforms are dumb as much that they considered bitcoins coming from Bisq as 'tainted' and block account too.

[squatz1]

A large increase in traffic to and from mixers, and a large decrease in traffic to and from centralized exchanges. I don't find this surprising at all. As time goes on, centralized exchanges are more and more turning themselves in to self appointed judge, jury, and executioners for people who use them. They track the movement of your coins long after you withdraw them from the exchange, and they look back at the history of your coins long before you deposit them at the exchange. If they don't like what they see, your account is locked and there is nothing you can do about it. If you perform some arbitrary "suspicious activity", your account is locked and there is nothing you can do about it. If you deposit too much too quickly or withdraw too much too quickly, your account is locked. I'm sure that plenty of coins that have touched a darknet entity have been locked, frozen, or seized as soon as they touched a centralized exchange, but this isn't just the case for darknet entities. There are centralized exchanges policing perfectly legal bitcoin usage, such as to and from casinos and gambling sites.

We will continue to see the popularity of mixers and other privacy enhancing techniques such as CoinJoin and PayJoin increase as time goes on.

I mean, I hate Centralized exchanges as much as the next guy -- but I don't think they have much of a choice if they want to stay in business and not be shut down. The only reason that these companies are doing these things -- such as tracking your coins a few hops back, sending notices regarding using mixers / gamblign, etc -- is because this is what the government that their licensed under wants them to do.

No company is going to want to waste extra resources just for the fun of it, they're going to do it because they were forced into doing this sort of thing.

I do think that decentralized exchanges will grow at some point, but people need to learn the in's and outs of using crypto first -- and I don't think we're there yet. Using an exchange like Gemini, Kraken, Coinbase, is so much easier and quicker to use then trying to get bisq to work (in the eyes of a first time user)

[o_e_l_e_o]

I mean, I hate Centralized exchanges as much as the next guy -- but I don't think they have much of a choice if they want to stay in business and not be shut down.

I don't disagree. They are the victim of their own success. They drew so many customers and so much money passing through them that of course they were going to attract the attention of various governments and regulations. I don't blame them for requiring KYC, for example. I do blame them for letting customers deposit and trade, and only requiring KYC when they try to withdraw, effectively holding their coins hostage unless they comply, however.

Still, my point still stands. It doesn't really matter who is mandating that Binance stick their noses in to everything you do, and even freeze your account and lock your coins if you do something - again, with your own money - that they dislike. What matters is that it is happening, and we shouldn't stand for it. Whatever happened to not trusting third parties to have complete control over your money?

Using an exchange like Gemini, Kraken, Coinbase, is so much easier and quicker to use then trying to get bisq to work (in the eyes of a first time user)

Again, I don't disagree, and I think it's the main stumbling block (that and volume) to getting widespread DEX usage. Once you are familiar with the likes of Bisq though, it really is fairly straightforward to use.

[squatter]

I didn't know that, but after a quick search it seems that Binance did indeed freeze accounts a few months ago of users who had used CoinJoin transactions. Look at this twitter thread for example: https://twitter.com/bittlecat/status/1207894540322926593. His account and coins were only unfrozen after he "promised" to stop trying to protect his privacy.

Seriously, this is insane. User takes basic steps to afford himself the smallest bit of privacy after already completing full KYC at an exchange, and the exchange literally confiscates his money until he promises to let them stick their noses in to everything he does, every transaction he makes, everywhere he sends his own money.

Why do people use Binance again? Is this level of surveillance worth it to trade shitcoins?

This is something worth clarifying. Binance Singapore is a fiat exchange that only has a handful of listed markets. When this happened, CZ strongly implied that something like this would only occur on Binance's "regulated" exchanges, and not on Binance.com.

At the time, a new Singapore law subjecting cryptocurrency exchanges to existing financial regulations was about to come into effect. Binance was either applying or about to apply for a license from the Monetary Authority of Singapore. This likely had an impact. The MAS's language about the need for exchanges to implement "activity-based" and "risk-focused" mitigations strongly echoes the FATF's AML model.

I'm not happy about it, but it should come as no surprise when regulated fiat exchanges avoid doing business with "risky" customers. That's their prerogative. We've seen what can happen when exchanges flout money laundering regulations.

[suchmoon]

I'm not happy about it, but it should come as no surprise when regulated fiat exchanges avoid doing business with "risky" customers. That's their prerogative. We've seen what can happen when exchanges flout money laundering regulations.

As far as I can tell nobody is really holding a gun to CZ's head and forcing him to do fiat business in some hyper-regulated shithole, nor forcing him to screw customers over without properly disclosing what the customers are or are not allowed to do with their funds. It is entirely Binance's fault for handling it the way they did and they fully deserve to be ridiculed as an example of extreme overreach. Not that it will help much, the governments will try to criminalize coin mixing and greedy assholes like CZ will continue to throw their customers under the bus.

[RapTarX]

Today it's about the darknet, tomorrow we will have a lot of other use cases...

I just saw this post couple of minutes ago- https://bitcointalk.org/index.php?topic=5225153.msg54469224#msg54469224
No. 1 all-rounder cricketer Shakib Al Hasan was asked to give his bitcoin wallet (indirectly though), he was ask sharing inside information and match fixing. Although, it's quite unusual and I wouldn't support that, it's good that btc is being more popular.

[o_e_l_e_o]

When this happened, CZ strongly implied that something like this would only occur on Binance's "regulated" exchanges, and not on Binance.com.

For now. How many exchanges have we seen that have sprung unannounced KYC on their entire customer base, and frozen everyone's accounts until they comply? How many exchanges have we seen to suddenly stop supporting entire countries, leaving all their users from said countries unable to access their coins? How many exchanges have arbitrary shut down user's accounts with no warning because of unspecified "suspicious activity" or because they triggered some secret algorithm? As soon as the government decide, I have no doubt that Binance will fold immediately and sell out their user base, as suchmoon has said. History has shown us that whenever a centralized exchange has had to choose between protecting the privacy of their customers or maximizing their own profits, they have invariable chosen the later.

[pooya87]

i have never trusted the stats that are released by chain analyzers. they have always been exaggerating things not to mention that their methods are severely flawed to begin with so their results aren't even correct without the exaggeration. for instance i have seen many times that coins that have absolutely nothing to do with CoinJoin be categorized as CoinJoin transactions by these analyzers.

you can see how wrong the stats are here too by looking at the first chart. that has to show an increase on all parts during 2017 but it doesn't. there is only a rise during Q3 and a surprising decline in Q4 for exchanges with verification and a constant decline for those without.
keep in mind that during the end of 2017 we had the biggest increase in number of newcomers to the point where centralized exchanges (with verification) such as Coinbase were reporting millions of new users every week. also considering the huge volume of that point it shows a lot more coins were being sent to these exchanges during that time. in other words the decline shown in that picture makes zero sense.

same with "other entities". the spam attack alone should be categorized here and should show a gigantic spike during 2017 specially the second half which should decline during 2018 and 2019. instead it is rather a stable line around 7%!!!

[squatter]

I'm not happy about it, but it should come as no surprise when regulated fiat exchanges avoid doing business with "risky" customers. That's their prerogative. We've seen what can happen when exchanges flout money laundering regulations.

As far as I can tell nobody is really holding a gun to CZ's head and forcing him to do fiat business in some hyper-regulated shithole, nor forcing him to screw customers over without properly disclosing what the customers are or are not allowed to do with their funds.

All of the FATF member countries are becoming hyper-regulated, not just Singapore. The US and the EU are becoming draconian too.

I'd say that anyone using any centralized exchange should expect anything from invasive AML/KYC to frozen funds, account closures or outright exit scamming. The root of the problem is that people trust exchanges not to do these things.

It is entirely Binance's fault for handling it the way they did and they fully deserve to be ridiculed as an example of extreme overreach.

I'm confident that Gemini, Coinbase and many others are closing accounts in similar cases. They usually aren't stupid enough to say why.

About a year ago, there was a very similar case with Bitfinex.

It is overreach, but I think it would be naive to deny this is the direction things are headed. This is actually one of the reasons I prefer ChipMixer to CoinJoins. The latter are too obvious on-chain, at least when using popular methods like Wasabi Wallet.

When this happened, CZ strongly implied that something like this would only occur on Binance's "regulated" exchanges, and not on Binance.com.

For now.

I fully agree, but I also think it's worth pointing out. Binance buried themselves in the Seychelles rather than a more respectable jurisdiction for good reason.

[o_e_l_e_o]

It is overreach, but I think it would be naive to deny this is the direction things are headed.

It is absolutely the way things are headed, much to my disdain and much to the detriment of individual users and the entire bitcoin ecosystem. Unfortunately, it seems the vast majority of users are quite willing to continue to subject themselves to the iron grip of centralized exchanges until it impacts them personally. They see the stories of withdrawals being denied, of coins being seized, of accounts being locked, but ignore it all and continue to use these exchanges. It seems to only be when someone actually loses their own coins that they finally make the move to a decentralized exchange.

This is actually one of the reasons I prefer ChipMixer to CoinJoins. The latter are too obvious on-chain, at least when using popular methods like Wasabi Wallet.

Not sure I follow your logic here? Although it is impossible to link coins which have come from ChipMixer with coins which have been sent to ChipMixer, it is trivial to identify coins as having come from ChipMixer, given their very characteristic chip creation transactions. If an exchange wanted to ban all deposits from ChipMixer, they could do easily.

[squatter]

This is actually one of the reasons I prefer ChipMixer to CoinJoins. The latter are too obvious on-chain, at least when using popular methods like Wasabi Wallet.

Not sure I follow your logic here? Although it is impossible to link coins which have come from ChipMixer with coins which have been sent to ChipMixer, it is trivial to identify coins as having come from ChipMixer, given their very characteristic chip creation transactions. If an exchange wanted to ban all deposits from ChipMixer, they could do easily.

That's not quite as trivial as you make it sound, and could be disastrous for fungibility. There are very few CoinJoins on the network, so in my opinion they are low hanging fruit. I also think participating in Wasabi CoinJoins is more likely to mean directly transacting with DNM outputs, which may have some relevance in cases like these.

Paxful is another example. Too many services have been freezing accounts for CoinJoin activity over the past year to say the distinction is trivial.

[o_e_l_e_o]

That's not quite as trivial as you make it sound

Since ChipMixer gives you a private key, in the initial transaction you make to either sweep the coins to your own wallet or transfer them to someone else's wallet (such as depositing from an exchange), you only have to look back a single transaction and see 20 outputs all of 0.016 BTC (for example).

I also think participating in Wasabi CoinJoins is more likely to mean directly transacting with DNM outputs, which may have some relevance in cases like these.

Agree about this. CoinJoins can result in funds going directly from a darknet market or entity straight to an exchange in a single transaction. At least with a mixer there is an intermediary in the chain which might give the exchange some breathing space, as it were.

Too many services have been freezing accounts for CoinJoin activity over the past year to say the distinction is trivial.

I didn't mean the distinction was trivial, simply that exchanges could equally as easily ban deposits from mixers as they could deposits from CoinJoins, if they chose to.

[jentak]

This is actually one of the reasons I prefer ChipMixer to CoinJoins. The latter are too obvious on-chain, at least when using popular methods like Wasabi Wallet.

Not sure I follow your logic here? Although it is impossible to link coins which have come from ChipMixer with coins which have been sent to ChipMixer, it is trivial to identify coins as having come from ChipMixer, given their very characteristic chip creation transactions. If an exchange wanted to ban all deposits from ChipMixer, they could do easily.

That's not quite as trivial as you make it sound, and could be disastrous for fungibility. There are very few CoinJoins on the network, so in my opinion they are low hanging fruit. I also think participating in Wasabi CoinJoins is more likely to mean directly transacting with DNM outputs, which may have some relevance in cases like these.
Paxful is another example. Too many services have been freezing accounts for CoinJoin activity over the past year to say the distinction is trivial.

This whole thing made me thinking there are two different directions for crypto industry to develop into:
1 - close to original way, decentralized, anonymous, less controllable and etc.
2 - close to current banking way, more centralized, less anonymous, more controllable and etc.
I think we as active participants of this crypto world should always be aware which service do we use - if you are pro-1way user you should choose accordant service, same thing applies to pro-2way users

[Wingsbtc]

Honestly I don't understand why darknet users can't use better privacy coins that leave no traces when you make transactions from one address to another, Bitcoin wasn't build with privacy in mind, correct me if you think I'm wrong

[gentlemand]

Honestly I don't understand why darknet users can't use better privacy coins that leave no traces when you make transactions from one address to another, Bitcoin wasn't build with privacy in mind, correct me if you think I'm wrong

Because they're lazy.

I too expected everyone to be on XMR by now, it's far too easy to slip up with Bitcoin and lord knows what surveillance tools they have that they're keeping to themselves, but even if you're a loathsome druggist convenience still wins out for many.

With Monero you have to work harder to convert it, there's far less wallet choice and you're exposed to even more volatility. I'd still put up with that over a billion years in prison though.