Why do mixing companies want stolen bitcoins?

[BlackHatCoiner]

I'm not going to talk about those who use mixing companies just for privacy, but for those that use it to launder their money. Mixing companies mix people's bitcoins by giving them other funds that are not address connected with the stolen ones. This way, the thief can use his bitcoins without worrying about anything. (Although, he has to trust the mixing company)

As a fee for this procedure, mixing companies charge their users an amount of coins. I think they pay analogously of how many coins they want to mix. Anyway, here's the question:

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?

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[mocacinno]

Most of them send bitcoins they receive back to their next clients sooner or later..
Mixing is basically breaking the link between 2 wallets, it does not mean that the funds you receive as an output from the mixer cannot be coupled to any illegal activity... And that shouldn't be a problem either: can you prove that any fiat money in your wallet was never stolen or used to buy illegal narcotics?

[BlackHatCoiner]

it does not mean that the funds you receive as an output from the mixer cannot be coupled to any illegal activity...

According to chipmixer, it gives you some private keys that have no connection with the stolen funds. How exactly can the mixer's private keys be reported as illegal activity?

And that shouldn't be a problem either: can you prove that any fiat money in your wallet was never stolen or used to buy illegal narcotics?

You can't compare bitcoin with fiat, because they're not the same thing. About the dollars you have in your pocket, yes you can't know if they came through some drug dealing. And the reason is that there is no ledger. On bitcoin, though, you can see if a hacker moved bitcoins from the time he stole them.

[hatshepsut93]

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.

[mocacinno]

--snip--
According to chipmixer, it gives you some private keys that have no connection with the stolen funds. How exactly can the mixer's private keys be reported as illegal activity?

They give you private keys, which can be used to calculate public keys, which can be hashed.. These hashes (commonly known as addresses) can be funded with funds that can be linked with illegal activity. Just not with YOUR illegal activity... And that's the whole point of mixing...

--snip--
You can't compare bitcoin with fiat, because they're not the same thing. About the dollars you have in your pocket, yes you can't know if they came through some drug dealing. And the reason is that there is no ledger. On bitcoin, though, you can see if a hacker moved bitcoins from the time he stole them.

Sure you can... Banknotes have serial numbers...
It's perfectly possible for governement instances to see if a certain banknote was stolen from a bank... Or they can do trace tests for cocaine...
The point is: it's money... It shouldn't matter if it can be linked to illegal activity, as long as said illegal activity wasn't commited by the person whose currently in possession of the banknote in question. Nobody is going to convict you because you got a 5€ that was stolen by somebody else a long time ago as change when you bought a magazine.

[gentlemand]

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.

If I ran a mixer I absolutely would reject stolen coins that are directly traceable. You can be an enabler of privacy and not criminality. If it's a bit murky so be it, if it's straight from an outrageously publicised theft then I would refuse to aid their getaway. Needless heat and helping scum to profit is not my idea of fun.

[o_e_l_e_o]

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

But to do that, then you must investigate and trace all deposits. You must keep logs of all the deposits, and you must use blockchain analysis tools on every deposit to see if it is stolen or has links with any illegal activity. Any coins which are flagged up by your algorithm are then locked or seized. At that point, your mixer is essentially no different to depositing and withdrawing coins from a centralized exchange. It is not private, it is not safe, and no one with any sense is going to use it.

It's the same principle as governments trying to ban encryption or force back doors in to encryption software to "stop the terrorists". Once you allow the privacy to be compromised for anyone, then it is useless for everyone.

[d_fitrie]

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.

If I ran a mixer I absolutely would reject stolen coins that are directly traceable. You can be an enabler of privacy and not criminality. If it's a bit murky so be it, if it's straight from an outrageously publicised theft then I would refuse to aid their getaway. Needless heat and helping scum to profit is not my idea of fun.

I would also reject stolen coins because it is a crime, but many who accept stolen coins are predictable for extraordinary profits, and they hold stolen coins no matter if they are true or false.

[ilovealtcoins]

Why do you know the mixed companies want more Bitcoin stolen?
Surely criminals will use mixers to launder money. Of course, the mash company will get a certain expense, but I don't see them big enough to enrich the company.
Mixers are created not only to launder dirty money, but they also provide user privacy and prevent the traceability of others.
What if the government asks mixed companies to block addresses from stealing bitcoins?

[dothebeats]

I don't think 'want' is a word you are looking for. Mixing services are employed to sever a connection of transactions at a particular point, making the user somewhat anonymous again since the trail is already convoluted or tainted with lots of in-betweens. They are receiving fees for the coins that they mix, and they do not have control on whatever coins they receive in the process, so it's not really uncommon for them to receive coins that are tainted with illegalities but still accept them since that is what their service is for.

I mean, if I am an anonymous entity hiding in the sidelines and someone wanted to trade his/her stuff with mine in exchange of a small sum, why shouldn't I do it?

[blockman]

Why do mixing companies want stolen bitcoins?

It's not the service is all about. It's about mixing coins from the entire circulation or storage that they have and then giving the sender with a new set of bitcoins without any connection to the wallet where he had sent it. Mocacinno explained  properly what's the business model of mixers.
It doesn't mean that they are a mixer, they want stolen bitcoins to service.

[Ucy]

Most of them send bitcoins they receive back to their next clients sooner or later..
Mixing is basically breaking the link between 2 wallets, it does not mean that the funds you receive as an output from the mixer cannot be coupled to any illegal activity... And that shouldn't be a problem either: can you prove that any fiat money in your wallet was never stolen or used to buy illegal narcotics?

Interesting.
Digital fiat currencies aren't that transparent. I don't know of anyway to prove that apart from trusting those who control them "privately" to prove it. The case is different with Bitcoin... it's public and transparent, and lots of activities/transactions on its network can be seen and possibly tracked by anyone.

In regard to mixing stolen money by mixing services, I wonder if any of them have been caught deliberately mixing stolen bitcoins. That will be very immoral.

[7788bitcoin]

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?

Mixing as a service is provided for everyone to have privacy and they will not monitor the source of your coins nor will ask you to fill in a form and reveal your identity and that is the whole purpose of mixing  . It is possible to track the mixed coins, all mixer does is split the coins into several multiple transaction and you will get the coins that are not related to your wallet and it is a rinse and repeat process.

In the future we might hear people getting caught using mixed coins if some of the coins you received came from hacked sources, with many companies monitoring these transactions it is highly possible we might see those scenarios in the future.

[hatshepsut93]

But to do that, then you must investigate and trace all deposits. You must keep logs of all the deposits, and you must use blockchain analysis tools on every deposit to see if it is stolen or has links with any illegal activity. Any coins which are flagged up by your algorithm are then locked or seized. At that point, your mixer is essentially no different to depositing and withdrawing coins from a centralized exchange. It is not private, it is not safe, and no one with any sense is going to use it.

It's the same principle as governments trying to ban encryption or force back doors in to encryption software to "stop the terrorists". Once you allow the privacy to be compromised for anyone, then it is useless for everyone.

And there can be a huge problem with false positives, since every coin has some precentage of taint to it, so you could be freezing legitimate funds. Or someone who wants to breach others privacy could contact you and pretend they are a victim of a theft and request your data about certain transactions.

If I ran a mixer I absolutely would reject stolen coins that are directly traceable. You can be an enabler of privacy and not criminality. If it's a bit murky so be it, if it's straight from an outrageously publicised theft then I would refuse to aid their getaway. Needless heat and helping scum to profit is not my idea of fun.

If there's something like a very recent exchange hack and you're 1000% sure that this is the stolen money, than it makes sense, but if you try to, like o_e_l_e_o said, verify every single transaction, it would do more harm than good.

[seoincorporation]

...
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?

i can't believe that service is legal, but what i know is they have some nice skills and algorithms to mix the coins and avoid tracking. I don't think they buy monero because for that they should send the bitcoins to an exchange.

[gentlemand]

If there's something like a very recent exchange hack and you're 1000% sure that this is the stolen money, than it makes sense, but if you try to, like o_e_l_e_o said, verify every single transaction, it would do more harm than good.

Of course, and I wouldn't have the time anyway and I presume mixers can't be arsed because of that. But if it's red hot and direct from the source then I would choose not to aid them.

[imstillthebest]

Why do mixing companies want stolen bitcoins?

depends on the mixer , i guess its possible for them to know if where the coins came from . they can wait for a while if there will be people that will claim the coin and declare that it was stolen and the mixer can refuse the transaction but there could be mixer that dont care but only care for the profits .

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?

why will they track by fbi .they are just doing a business  but if fbi declare a rule related to stolen coins , they will do what i said earlier which is inspection . why will they sell it for monero ? they are the mixer them selves . the profit can be keep and use for thier personal needs

[The Cryptovator]

Most probably mixer collects fresh funds from peer to peer exchange and they would create many transactions to make trace longer. And that's how mixer collects again fresh funds. They would exchange it for monero or other coins and eventually hold bitcoin for their mixer. I am in one mixing chat group called jambler, they only exchange BTC to BTC with some extra return. As I noticed from them that they accept only funds from LocalBitcoins and stock exchange. Then they pay a few percentages extra funds to the exchanger.

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

I think it wouldn't easy since you have to trace the transaction then block it. If you do like this, then no one will use your mixer due to fear of loss. Also, we know about hack or scams after revealed it. News spread only when hacked big exchanges. But there is very little news about the small hack. Hackers would mix their stolen coins before revealed the news. Who knows if hackers make a withdrawal directly to the mixer address. Then even you can't trace them that they are hackers if they make a small transaction.

[gentlemand]

I think it wouldn't easy since you have to trace the transaction then block it. If you do like this, then no one will use your mixer due to fear of loss.

I didn't say it was practical or feasible. It no doubt is not.

I guess you could run a 'nice' mixer with Carebears and stuff on the main page and farm out a horrible one with photos of axes and roadkill and stuff. Then I'd lease that to the FBI.

[CarnagexD]

Mixing isn't made or this purpose, it is just that criminals find it a very easy way to get out and leave no shadow behind. Does mixing companies want stolen bitcoins? Basically, NO, who wants to be involved in a crime at all? Besides, I don't think mixing companies would not be that too reliable or the authorities to investigate, how are they going to know who tried to mixed a stolen $100K from an exchange?

[Pffrt]

Most of them send bitcoins they receive back to their next clients sooner or later..
Mixing is basically breaking the link between 2 wallets, it does not mean that the funds you receive as an output from the mixer cannot be coupled to any illegal activity... And that shouldn't be a problem either: can you prove that any fiat money in your wallet was never stolen or used to buy illegal narcotics?

Then will not someone be affected with that? Some people may use mixing service just for privacy, so that no one can trace how much BTC they have. Now, if they receive BTC originated from a scam, what would be the result if once they got caught. For example, if I use a mixing service for privacy and receive BTC which originated from hacking or such activities and later I have moved that fund to any exchange, wouldn't that result me tagging as the hacker?

[posi]

Why do mixing companies want stolen bitcoins?

The purpose of mixing companies was enhance people anonymity since Bitcoin have a public ledger of all transactions which could make people vulnerable to attack but if hackers make use of mixing company thats not the company fault and the company tracing the source of fund mean they broke their side of the deal.

Don't they get tracked by the FBI? Even if 1 bitcoin is stolen, it can be tracked.

The FBI and other authority track them but their search is always die end.

What do they do it after they receive it? Do they sell it for monero?

Only people that work behind the mixing scheme know about that.

[teosanru]

I'm not going to talk about those who use mixing companies just for privacy, but for those that use it to launder their money. Mixing companies mix people's bitcoins by giving them other funds that are not address connected with the stolen ones. This way, the thief can use his bitcoins without worrying about anything. (Although, he has to trust the mixing company)

As a fee for this procedure, mixing companies charge their users an amount of coins. I think they pay analogously of how many coins they want to mix. Anyway, here's the question:

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?

Generally they don't have any record of the person who is getting it exchanged. Moreover it's pretty difficult for them to trace out whether the money is money of fraud or not. Yes FBI or similar agencies can hunt these mixers but they generally are located at offshore places where you can barely touch them as per the local laws. Moreover most of them clearly indicate on their websites about their user policy. Moreover i think if there is a complete investigation using a summon or subpoena these mixers would just provide the information about how the coins were mixed and that would be suffice for them to get out of the Radar of such agencies so mixers are always on profit in such situations.

[Quidat]

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?

Mixing companies doesnt like it either but basing on the service that theyre giving then they are much pretty aware that it would really be part of their day to day operation
where stolen or hacked funds will surely flow into the system.This is why we do see several mixing companies do really face up some charges due to this kind of issue
but still there are some who do continue to operate after all these years.I do agree on some points that those received coins from people who get involved on hacked or
scam will really be pass up into other clients as well, so the output or coins been generated by mixers itself cant really be considered to be clean and you wouldnt know
on when it do generated but most like this will be the case.

[NotFuzzyWarm]

And there can be a huge problem with false positives, since every coin has some percentage of taint to it

Not mine. Every Satoshi I have were earned via mining and are/were New coins.

Now for folks that buy coins, ja some coins or some part of them may be tainted.

[pixie85]

I treat BTC like I treat cash. I don't check my cash for traces of drugs, blood or semen so why should I care where my Bitcoins come from?

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.

[Distinctin]

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?

Mixing companies never wanted it to happens, stolen Bitcoin or any crypto are sent to the other wallet using their services to get unnoticed by the authorities that are likey it pertains to happen. To the fact that these companies are not asking where it comes, no KYC, all of us are welcome to use them whether it is coming from illegal activities or not.

Any claims that put mixers as a tool to make transaction untraceable and the person who did this is true but even the authorities know it, there is no wat to catch those people who use their services, they keep themselves anonymously, it never makes sense having those transactions at all since they can still put them in jail.

[DoublerHunter]

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?

Mixing companies never wanted it to happens, stolen Bitcoin or any crypto are sent to the other wallet using their services to get unnoticed by the authorities that are likey it pertains to happen. To the fact that these companies are not asking where it comes, no KYC, all of us are welcome to use them whether it is coming from illegal activities or not.

^ Because that was designed just for the privacy concerned against also from the theft, revealing your identity if there is no mixing service also will probably risk your fund. Although we can't deny the fact that bitcoin mixing service is prone to use by scammers but this is a natural thing. We have nothing to do with this, even in fiat there is also a hacking incident. All form of valuable currencies was the same as bitcoin, there is clean and dirty. Nevertheless, if the bitcoin address were was marked as a scam, bitcoin mixer services will easily to spot this address, probably they can able to stop dirty money or stolen bitcoin to mix their service.

[Tipstar]

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?

Mixing companies never wanted it to happens, stolen Bitcoin or any crypto are sent to the other wallet using their services to get unnoticed by the authorities that are likey it pertains to happen. To the fact that these companies are not asking where it comes, no KYC, all of us are welcome to use them whether it is coming from illegal activities or not.

^ Because that was designed just for the privacy concerned against also from the theft, revealing your identity if there is no mixing service also will probably risk your fund. Although we can't deny the fact that bitcoin mixing service is prone to use by scammers but this is a natural thing. We have nothing to do with this, even in fiat there is also a hacking incident. All form of valuable currency was the same with bitcoin, there is clean and dirty.

There are many mixing companies that were shut and their fund confiscated. The one's that are surviving are mostly out of reach for US.
Though there are many people that uses mixers for privacy rather than money laundering but their proportion are similar to people using torrents for file transfer than piracy.
What's good money and bad money again is a matter of debate. What a government of a nation finds illegal may not be illegal everywhere. There are many countries in the world that happily launders money legally.

[Sadlife]

First of all they don't actually know if the given funds to mix, is stolen. It takes time to throughly verify Bitcoin amount in the blockchain. Unless its a big company with a lot of technical personnel to quickly take action. But the hacker, could easily convert it to privacy token such as Monero, and back to Bitcoin so it wont get track by the authorities.

[Insanerman]

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?

Mixers never 'WANT' stolen bitcoins. In fact, mixers doesn't really care about the source nor the reason behind the bitcoins they mix at all. Mixers are made to make the bitcoin untraceable (obviously). Yes, they somehow can, but they would find a lot of addresses connected to the main source, both from any sources that uses the mixer as well., hence it would be tough tracking dozens of addresses connected to their target. Also, if they use mixer, their coins can and might be also mixed with other illegal bitcoins, therefore making it require a broader investigation about each and every addresses and bitcoins mixed with their target.

[CryptopreneurBrainboss]

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 from patronizing you also cut off some huge volume as they're mostly those that mixed their coins but still it'll be worth it. Some positive development in the community has made it possible to alert the general public on wallet address associated a certain hack event before the hacker is even done hacking the exchange or what ever centralized platform they're working on.

Having system put in place that blacklist funds coming from that address or any other associated one would be appreciated provided the funds are safely returned to the exchange or platforms been stolen from.  I understand this is exactly what the banks are doing that most bitcoiners don't welcome but since most mixers are centralized, having them use that to the advantage of the community would be a welcomed development.

[btc78]

Why do mixing companies "WANT" stolen bitcoins?

Seems like the word you use is Foul,Mixing company wanted them but they accept anything mixed in their system knowing all has gone thru process in legal matter,
so i think you need to edit the term instead of using WANT better use the word ACCEPT that
 two word has different meaning.

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?

These question is not in our knowledge to answer because this is technicalities .

[Yogee]

....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.

[crwth]

....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.

For the OP, I'm quite curious about where they indicated they want stolen bitcoins?

[Yogee]

....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. 

[mocacinno]

--snip--
Then will not someone be affected with that? Some people may use mixing service just for privacy, so that no one can trace how much BTC they have. Now, if they receive BTC originated from a scam, what would be the result if once they got caught. For example, if I use a mixing service for privacy and receive BTC which originated from hacking or such activities and later I have moved that fund to any exchange, wouldn't that result me tagging as the hacker?

But ARE you the hacker? If not, you should have nothing to worry about... The same with the serial number on the 50€ note in my pocket: if i go to a bank later today, and i deposit said banknote, but as soon as i hand it over to the teller he discovers the banknote was once stolen from an ATM, do you think i'll be in trouble? No, because i wasn't the one who stole it. Worst thing that'll happen is that the police might take my fingerprints and my picture so they can rule me out as a suspect. Or maybe they'll ask me if i remember where i got the 50€ note.
Not fun, but not terrible either.

I'll make a fictive case study here, i'm assuming a huge fee of 0.01 BTC/tx, irregardless of it's size (a dumb thing to do), i'm also assuming transactions 1 input + 1 output (no change, no multiple inputs):
1Victimaddress was funded with an unspent output of 1 BTC
A Phishing mail convinced him to spend his 1 BTC and fund address bc1PhisherAddress with 0.99 BTC
The Phisher mixes his funds by sending 0.98 BTC to the mixer's deposit address 1MixerAddress, he receives 0.96 BTC to his address 1CleanAddress
Some days later, you mix your 0.98 BTC and you get the unspent output that was funding 1MixerAddress as a return, so the mixer is funding 1Youraddress with 0.96 BTC.
You deposit these mixed funds to an exchange: 0.95 BTC to bc1ExchangeAddress

If we follow the uspent outputs and see wich addresses they fund, we see something like this:
1Victimaddress => bc1PhisherAddress => 1MixerAddress => 1Youraddress => bc1ExchangeAddress

Now, this is an over simplified example. You have multiple inputs, multiple outputs, the mixer does some internal reshuffeling (usually)... But even here: if the exchange sees this chain, how are they going to prove you are the owner of bc1PhisherAddress? They simply cannot because the funds passed trough 1MixerAddress. They can tell you those funds have a taint, sure, but they can never ever prove you are the phisher. Even if they would contact law enforcement, it wouldn't really matter, there simply isn't a 1:1 relationship, even in this over-simplified example.

[witcher_sense]

It is safe to assume that in the transparent bitcoin network there is literally no user or business, including mixing companies, who wants intentionally to be connected to any criminal activities in general, and stolen bitcoin in particular. As a rational participant in the network, every bitcoin user would rather transact with "clean" coins and avoid using "dirty" coins at all costs. In short, no one wants stolen bitcoins. The "problem" here is that bitcoin is designed to be censorship-resistant. That basically means no third party is able to prevent you from sending or receiving coins. If bitcoin weren't a censorship-resistant coin, it would be no better than digital fiat controlled and censored by banks. Mixing companies value that feature of bitcoin and have never tried to act as traditional banks, which are always eager to separate legal and illegal money.

[Slow death]

Why do mixing companies want stolen bitcoins?

and how will the mixer service know that funds are stolen? someone can steal many bitcoins and after years of starting to mix bitcoin in parts on the mixer service do not suspect that they are stolen bitcoins. there is one thing to note:

If governments are forcing exchanges to comply with KYC, then the mixer itself is already illegal (obviously KYC is crap that forces customers to do KYC while the owners of the exchanges are anonymous) and governments (who are people corrupt or immoral in most cases) will start chasing mixers

Don't they get tracked by the FBI?

i think the mixer owner knows that any slip will be stuck, i wonder how will the mixer owner live? he must live in fear

[davis196]

I'm not going to talk about those who use mixing companies just for privacy, but for those that use it to launder their money. Mixing companies mix people's bitcoins by giving them other funds that are not address connected with the stolen ones. This way, the thief can use his bitcoins without worrying about anything. (Although, he has to trust the mixing company)

As a fee for this procedure, mixing companies charge their users an amount of coins. I think they pay analogously of how many coins they want to mix. Anyway, here's the question:

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?

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.

[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.

[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]

snip

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]

snip

snip

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.