Why do mixing companies want stolen bitcoins?

[proTECH77]

Bitcoin is too popular than any other cryptocurrencies in the world. Mixing companies are still wondering how come bitcoin Still have so much population and so much coins for his customers.
Many scammers are trying to scam from bitcoin but there's no way to scam without no trace of the scammer. I think those mixing companies are not trying to steal than to try to transact with bitcoin and make their own profit from the business.

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[NeuroticFish]

First answer:Because this is their "target market" and scammers/hackers are the main customers of mixing services.
Second answer:They actually "don't want" stolen bitcoins and they don't have any legal responsibility for the coins mixed by using their service.Bitcoin mixing is still legal,but the users who are mixing stolen bitcoins are the ones committing a crime.The Bitcoin mixer isn't responsible for any illegal activity committed by other people.
This is just my theory,I might be wrong.

I don't agree with this. Of course this also doesn't mean that you are wrong and I am right, I may easily be also wrong.

[1] I think that the target market is anybody who cares more than the average people on their privacy (and still use Bitcoin instead of Monero, but that's another story). So not necessary only scammers/hackers/wrongdoers.
[2] I think that most of them don't care. Money is money. And the part getting to the mixer is only the fee, since the bulk of the money will reach other customers' wallets.

I'll also add a [3] There might be (not sure though) mixers that will not mix coins 100% known to come from known hacks and actually give them back to exchanges or authorities. This is possible and if I'd have a mixer doing this I'd surely not make too much noise (honeypot?). Of course, this (point 3) is more a wild theory than the actual reality.

[Reatim]

Why do mixing companies want stolen bitcoins? Don't they get tracked by the FBI? Even if 1 bitcoin is stolen, it can be tracked. What do they do it after they receive it? Do they sell it for monero?

Wrong No one knows if those bitcoin really comes from stolen coins so you have no rights to call them "Wanting some stolen coins to be mixed " specially those established mixing company like the one who is being advertised here in forum.

if those illegal money being mixed i believe it is out of our concern since it is not our money and doesn't nothing for us.

Bitcoin is too popular than any other cryptocurrencies in the world. Mixing companies are still wondering how come bitcoin Still have so much population and so much coins for his customers.
Many scammers are trying to scam from bitcoin but there's no way to scam without no trace of the scammer. I think those mixing companies are not trying to steal than to try to transact with bitcoin and make their own profit from the business.

Mixing company don't steal peoples money ,they only charge fees in each transactions and that is their income to be used by people who wanted to stay anonymous .

[pooya87]

....I think that mixers should offer their services to everyone just like doctors cure everyone. They don't discriminate between good and bad people they just do their job.

But aren't hospitals or doctors suppose to file a report of patients wounded from gun shots, knives, or any objects that indicates they got it from a fight? Imagine if mixers would do the same thing and report all deposits from their customers to authorities. I doubt you would want that.

That's the thing with mixers, they don't ask, they just receive the coins and that's what people find convenient whether dirty or not. The faster you could do the transaction the better. I don't think they would use the mixers in which you have to fill out where it came from though.

I'm just adding to the comparison made by pixie85. Doctors would gather information about the patient and make a report. Wounded patients who are likely criminals or offenders would be considered the same as tainted BTC. If mixers should offer their service as doctors do, they will be obliged to submit data too. 

but that is a very weird comparison. a gunshot wound is the result of an obviously criminal act, specially in most of the world where owning a firearm is not allowed. so reporting it is justifiable and is a must. on the other hand coins that are being mixed are from people who want to increase their privacy and there i no obvious way of knowing whether said coins are coming from a criminal act or not.

[o_e_l_e_o]

First answer:Because this is their "target market" and scammers/hackers are the main customers of mixing services.

A common fallacy which is often repeated on these forums and elsewhere, and is also 100% incorrect.

A report by Chainalysis (which is viewable here: https://register.gotowebinar.com/recording/8980410054773689612) showed that only 8% of coins coming being deposited to mixers are coming from scams, hacks, or otherwise illegal activities. The majority of coins being deposited to mixers are coming directly from exchanges. Therefore, the main customers of mixing services are in fact completely law abiding users who are simply looking to gain some extra privacy from centralized exchanges, who are becoming renowned for their desire to stick their noses where they don't belong.

Bitcoin mixing is still legal,but the users who are mixing stolen bitcoins are the ones committing a crime.

Stealing bitcoin is a crime. If I end up in possession of previously stolen bitcoin through no illegal means, such as if I trade for it or sell goods for it (just as you can end up in possession of previously stolen fiat through no illegal means), then spending those coins (including mixing them) is not illegal.

[pixie85]

I'm just adding to the comparison made by pixie85. Doctors would gather information about the patient and make a report. Wounded patients who are likely criminals or offenders would be considered the same as tainted BTC. If mixers should offer their service as doctors do, they will be obliged to submit data too.  

but that is a very weird comparison. a gunshot wound is the result of an obviously criminal act, specially in most of the world where owning a firearm is not allowed. so reporting it is justifiable and is a must. on the other hand coins that are being mixed are from people who want to increase their privacy and there i no obvious way of knowing whether said coins are coming from a criminal act or not.

Yo beat me to it, so I'll just say that I agree with the answer.

A doctor was one of the examples that came to my mind and was very general. We could say it's a currency exchange owner. He takes cash and exchanges it. Doesn't ask for your personal details, doesn't take a photo of you, doesn't check the bills for stains of blood or narcotics, doesn't ask you where you got it from.

Why are we all of a sudden demanding that a mixer does a checkup of the coins, denies service if he finds them suspicious or files a report to the authorities?

[wwzsocki]

If I ran a mixer I absolutely would reject stolen coins that are directly traceable.

I think it is doable and won't be that difficult to execute, sure it'll drive away scammers and illegal customers...

Of course, it's doable and won't be difficult, I even can imagine such transactions as charity donations which have to be made in BTC or somebody will do such charity payment in BTC and don't want to be recognized, but we all agree that it would be only 0,001% of transactions happening on a mixer and whopping 99.999 is because of all kind of scam.

Mixing was invented only because BTC becomes traceable. The purpose of mixing is to make specific BTC coins not possible to be connected with a specific person or entity. Why?

Because all these people don't want to be connected with this money, despite they own them and this is always because of some sort of scam, it could be taxes, illegal activities, personal reasons (to hide from wife in court) and dozens of other situations.

There is no doubt that all the biggest and most successful mixer services accept BTC from scammers on daily basis and there should be no doubt about this.

I agree that a fully "transparent" mixer will be possible but not rentable, so no way to be existing as a normal business, there are possibilities, of course, but legal usage of mixers not related to scam, which will be worth to pay such high fees for service like that is just so small and irrelevant that nobody will be interested to donate or run it pro bono, no matter what.

That is why such transparent and only "legit" money mixers don't exist.

[TimeTeller]

The point of mixing is that the service doesn't ask about the source of money. If they did, it wouldn't be mixing anymore, just some pinky-promise "privacy" service where you trust that they won't give all the data to the authorities when requested. Btw, if mixers keep logs, they can still know the inputs and the outputs, and maybe they actually do cooperate with authorities, who knows? This is why criminals start to preferring Monero, where privacy is made on a protocol level.

If bitcoin mixers will start asking the source of funds, I don't think people will use their services.
So mainly, this is just another money-making business, trying to rake some money from users who want to keep their privacy.

If I ran a mixer I absolutely would reject stolen coins that are directly traceable.

I think it is doable and won't be that difficult to execute, sure it'll drive away scammers and illegal customers...

Of course, it's doable and won't be difficult, I even can imagine such transactions as charity donations which have to be made in BTC or somebody will do in BTC and doesn't want to be recognized but we all agree that it would be 0,001% of transactions happening on a mixer and whopping 99.999 is because of all kind of scam.

Mixing was invented only because BTC becomes traceable. The purpose of mixing is to make specific BTC coins not possible to be connected with a specific person or entity. Why?

Because all these people don't want to be connected with this money, despite they own them and this is always because of some sort of scam, it could be taxes, illegal activities, personal reasons (to hide from wife in court) and dozens of other situations.

There is no doubt that all the biggest and most successful mixer services accept BTC from scammers on daily basis and there should be no doubt about this.

I agree that a fully "transparent" mixer will be possible but not rentable, so no way to exist as a normal business, there are possibilities of course, but legal usage of mixers not related to scam, which will be worth to pay such high fees for service like that is just so small and irrelevant that nobody will be interested to donate or run it pro bono, no matter what.

That is why such transparent and legit mixers don't exist.

Doable but are we going to expect that bitcoin mixers will do that on their own initiatives? I don't think so.
Maybe when they are faced with legal matters that they need to apply the tracing of their client's funds.
But til then, they will be doing their mixing services without caring where those funds come from.

[wwzsocki]

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Have you read more than the first few words in my post?

You would never comment like this if you do.

Additionally why to overquote like this? To make it looks bigger?

[o_e_l_e_o]

Why are we all of a sudden demanding that a mixer does a checkup of the coins, denies service if he finds them suspicious or files a report to the authorities?

Because people do not understand nor appreciate their privacy. It is concerning that such a lack of understanding is commonplace among the general population, but I find it doubly concerning that it is now becoming commonplace among the crypto community. People seem to want exchanges and governments to be able to monitor their every financial move, which is mind boggling since bitcoin was created specifically to remove trusted third parties from controlling your money.

but we all agree that it would be only 0,001% of transactions happening on a mixer and whopping 99.999 is because of all kind of scam.

this is always because of some sort of scam

but legal usage of mixers not related to scam ... is just so small and irrelevant

Please read my previous post two above yours. Pulling random numbers out of thin air, such as "99.999% of mixer traffic is from scams", with absolutely no evidence to back it up, is ludicrous. The biggest analysis of mixer traffic to date showed that only 8% of mixer traffic is linked to scams or otherwise illegal activities.

If you really don't want to visit the link, then please see the graphic below which neatly summarizes their findings:

[wwzsocki]

Please read my previous post two above yours...

I admit that I haven't read your post.

I read two first pages of the thread and all comments one by one, when I finally read something that I found interesting and reacted to it with my comment.

If you really don't want to visit the link...

I have but this is what I can see and sorry but I won't register to see the data.


https://register.gotowebinar.com/recording/8980410054773689612

I would love to because even with the screen provided I want to discuss the outcomes deeply before considering them as useful.
For sure I would like to know how they gathered all these data and from where? I have of course a dozen other questions...

Only because some of the transactions come from miners or exchanges doesn't mean they are clean and not from scammy activities.
Now even more important is why are they mixed and if will not be used to some scammy activities after, like buying guns or drugs and that is why they are mixed in the first place?

I don't judge, I am neither entitled nor willing to do so.

I accept mixers and understand that people use and need them to buy safely goods they couldn't otherwise without breaking the law and leave a trace to them which I find insane in 2020.
At this same time, I am not blind and have so much brain left to know why mixers are there, why people or different entities need them (don't want to be connected to specific BTC), why are mixers illegal, and the usage of them in the end.

Disclaimer:
Of course, all the numbers I have given are actually "finger-sucked" and I thought it would be obvious to at least 0.001% of members, or 99.999% - I don't know anymore  

[o_e_l_e_o]

I have but this is what I can see and sorry but I won't register to see the data.

You can type anything in to the boxes. The email address doesn't even need to be real one (as in, not even a burner one - they don't email a link or anything), as long as it is of the format xxx@yyy.com. The relevant section beings just after the 37 minute mark.

Only because some of the transactions come from miners or exchanges doesn't mean they are clean and not from scammy activities.

I'm not sure what you mean by this? Coins from miners are either newly generated block rewards, or rewards gathered from fees. Unless someone tries to launder money through paying an exceptionally high fee and then mining the transaction themselves (which would be entirely obvious), then how can these coins be from scams? Furthermore, the vast majority of coins from major hacks which hit centralized exchanges are going to be frozen or seized long before they are transferred out to mixers.

Now even more important is why are they mixed and if will not be used to some scammy activities after, like buying guns or drugs and that is why they are mixed in the first place?

This is just the "Nothing to fear, nothing to hide" argument, which has been thoroughly debunked. I would direct you to a previous post of mine on the topic here: https://bitcointalk.org/index.php?topic=5214200.msg53499357#msg53499357. I mix or coinjoin all my coins, despite doing nothing illegal with them, for the same reason I don't publish my bank statement on an public forum and I use a password on my email account - privacy.

[mocacinno]

@wwzsocki: every unspent output funding any address generated by any of my hardware wallets has gone trough a mixer or a coinjoin. Does this mean i'm buying drugs or weapons? Or am I the 0.01%, just like loads of other guys i know that mix because they don't think it's anyone's business knowing how much we hold, which addresses, when we received funds,...

[ReiMomo]

~snip~

Thank you for sharing this, it is clear that bitcoin mixer service is not only for pure stolen bitcoin. Is just a service for people who really want protection of their asset.

The result of the graph that based on Chainalysis was most of the exchange that want anonymity on their bitcoin, I guess that amount will go to their cold wallet from hot wallet. They don't want hackers will trace every transaction they had to avoid possible hacking. Stolen or dirty bitcoin that mix up of bitcoin mixer is just a normal.

[wwzsocki]

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Of course, both of you are correct and I think that we can agree that there will be many examples of 100% privacy concerned mixers usages, but at this same time, I will be able to provide exactly the same amount of mixers usage tied to cover or run illegal activities.

I would rather like to discuss already mentioned in this thread risks related to the use of mixers, which are in the end illegal and may be the cause of legal sanctions.

... it's anyone's business knowing how much we hold, which addresses, when we received funds,...

Fully agree with you, thanks for this comment, of course, you are right and this only shows the need for "trusted" and "decent" mixers.

Are you not afraid that one day you can be tied to some BTC from illegal activities because of using mixers?

If used quite often the list can grow and one day if something happens, even if you don't want to and all these mixings was done only because of privacy concerns, you could be investigated (at least) and for sure will be fully scanned by the authorities, isn't this what you want to avoid in the first place?

To be honest, you are risking legal sanctions to protect your privacy when using Bitcoin, it seems to be a little confusing/odd, hard to understand, don't you think?
There should some other, legal ways to do it, without risking anything in a "perfect world" of course  .

[Asuspawer09]

~snip~

Thank you for sharing this, it is clear that bitcoin mixer service is not only for pure stolen bitcoin. Is just a service for people who really want protection of their asset.

The result of the graph that based on Chainalysis was most of the exchange that want anonymity on their bitcoin, I guess that amount will go to their cold wallet from hot wallet. They don't want hackers will trace every transaction they had to avoid possible hacking. Stolen or dirty bitcoin that mix up of bitcoin mixer is just a normal.

A big percentage came from exchanges where users have their investment and trades. A big part of the mixing website was still used the majority in privacy as we can see in the graph. The percentage of funds in the mixer i not actually a big percentage but I guess it just doesn't happen every day but when it happened it just a big transaction.

I also used mixing for some of my transactions just for privacy and sometimes it is reliable since I could easily use it to transfer or import my funds in my wallet to a certain wallet.

[o_e_l_e_o]

I will be able to provide exactly the same amount of mixers usage tied to cover or run illegal activities.

I'm not sure if your meaning is getting lost in translation here, but how can you provide evidence of the same amount of mixer use being illegal? Where is this evidence? The biggest analysis done shows that only 8% is illegal.

which are in the end illegal and may be the cause of legal sanctions.

I am not aware of any law which states that mixers are illegal. Can you provide a link?

Are you not afraid that one day you can be tied to some BTC from illegal activities because of using mixers?

No. If we are talking about ChipMixer, then it is trivial to prove that the coins I am spending came from ChipMixer due to their classic chip funding structure and transactions. It doesn't matter where the coins came from before that, because they were not in my possession. I'm not concerned that the cash I am handed in a shop or from an ATM might have come from illegal activities, and so I am not concerned that the bitcoin I am handed from a mixer came from illegal activities.

If used quite often the list can grow and one day if something happens, even if you don't want to and all these mixings was done only because of privacy concerns, you could be investigated (at least) and for sure will be fully scanned by the authorities, isn't this what you want to avoid in the first place?

The same can be said of using Tor, or using encryption, or using end-to-end encrypted messaging, or not allowing the government to tap your phone lines, or read your emails, or your IMs, or your hard drives, or search your house, and on and on. If the only way to stop your government investigating you is by abandoning all privacy, then its time to move country.

[wwzsocki]

I'm not sure if your meaning is getting lost in translation here, but how can you provide evidence of the same amount of mixer use being illegal?...

Indeed meaning lost because I only said that for each legal usage I could bring examples of not legal usage, didn't mean exact numbers because as you know already - I don't know them.

I am not aware of any law which states that mixers are illegal. Can you provide a link?

Like every human being in the 2020 year, I use the internet to get information about almost everything.

When I put in google "are BTC mixers illegal?" this is what I see, as the first search result, additionally in the frame, highlighted from all the others.



When we look further to the next search results we will find this:  "US DOJ Calls Bitcoin Mixing ‘a Crime’ in Arrest of Software Developer"

Coin Ninja, Harmon created the bitcoin (BTC) mixer Helix, which sends transactions out in mixed batches so individual payments are harder to trace. In its indictment, the Department of Justice prosecutors refer to Helix as a “money transmitting and money laundering business.

https://www.coindesk.com/us-doj-calls-bitcoin-mixing-a-crime-in-arrest-of-software-developer

Of course, many other search results on google were linked to this arrest and described BTC mixing services as illegal.

https://securityboulevard.com/2020/02/bitcoin-tumbling-leads-to-multicount-indictment/
https://modernconsensus.com/regulation/when-is-bitcoin-mixing-a-crime/

And many, many more, not mentioned here, but I will come back to this in a second, please bare with me.

I have to admit here that I used mixers only on a few special occasions when there was a promotion to use them with rewards.

As we can see media show mixers as illegal, all search results on google are just screaming "illegal" and "stay away!", of course, before I provided them here, I have read all these articles and when I was done, I immediately started digging deeper because something doesn't add up here. The headlines scream that mixers are illegal, but the reality (as of today) is actually different.

When you start reading more carefully, it turns out that in fact mixers can be legalized and operate within the actual U.S laws.

The Financial Crimes Enforcement Network qualifies bitcoin mixers as money transmitters, so they have to register with FinCEN and apply for a license to operate on a state-by-state basis.

https://modernconsensus.com/regulation/when-is-bitcoin-mixing-a-crime/

So, if someone from the U.S wants to use a BTC mixer, he should make sure that they actually have such a license.

Now I want to say a few words about online media, especially crypto-related outlets. There is an obvious war ongoing and on purpose, I haven't mentioned many articles that also showed up in google search results on the first page, exactly from outlets like Coingeek, Cointelegraph, Bitcoin.com because it's just obvious that they are spreading maybe not fake news, but the way they do it, I will call at least manipulative. When I was reading these articles for me was just obvious that they are using cases like Coin Ninja to smear BTC, mixers, Lightning Network, and everything around the BTC ecosystem, call it not legal, threat. I see they are very happy to use BTC and "scam", or BTC and "money laundering" in one sentence, calling BTC mixers "illegal" and the usage of them, but in the end, the truth is totally different.

That is why we have so many misunderstandings, some media outlets try to make BTC looks bad and the use of mixers illegal, but the truth is different, BTC mixers are just a gray area as of now.

I will finish with another quote which strongly resonates with our discussion.

Forensic firm Chainalysis has said in the past that as much as 40% of all funds on crypto tumblers originates from crypto exchanges, while only 2.7% is sent from darknet markets. Of course, that doesn’t mean that the funds coming off the exchange weren’t used for illicit activities in the past. But a lot of this is difficult to track—and not always easy to prove.

https://modernconsensus.com/regulation/when-is-bitcoin-mixing-a-crime/

[o_e_l_e_o]

Indeed meaning lost because I only said that for each legal usage I could bring examples of not legal usage, didn't mean exact numbers because as you know already - I don't know them.

Ok sure, but examples of possible illegal uses doesn't necessarily mean that these illegal uses are actually taking place.

-snip-

Thanks for the links. As you say, all these media sites have their own agenda, and reports/articles from crypto media are notoriously poor quality and and unreliable.

The law relating specifically to money laundering - Title 18 of the United States Code, Part I, Chapter 95 (https://www.law.cornell.edu/uscode/text/18/1956) - makes it a crime "to conceal or disguise the nature, the location, the source, the ownership, or the control of the proceeds of specified unlawful activity" (emphasis mine). Based on this, mixing coins is only illegal if the coins themselves have been obtained from unlawful activity - scams, hacks, etc.

Based on that, using a mixer for your own privacy is absolutely not illegal, and as I said, I am unaware of any other law which contradicts the one I have linked above specifically for bitcoin mixers.

Also worth pointing out that the whole world isn't subject to US laws, despite how much the government wishes they were and how many international laws they try to break to make it so.