First Bitcoin Mixer Penalized by FinCEN for Violating Anti-Money Laundering Laws

[petyang12]

People can still launder money by using mixers. We can't control them but maybe government agencies can trace or track. It would be a waste if someone wants to send crypto privately even if it is a small amount since they wanted a privacy in sending crypto and money laundering people use such mixer to launder money. That is a disadvantage for mixers.

[deisik]

Not many may be aware that proxies, vpns and tor nodes are often run by businesses with connections to intelligence agencies like the FBI, NSA, CIA. Its an industry standard for virtually anything IT related.

This is true.However,the darkweb still exists...
I wonder why FBI,NSA,CIA didn't simply destroy the darkweb,since they control most of the Tor Nodes,proxies and they can request personal data from the VPN providers?Maybe spying the darkweb is better than destroying it?

Indeed it is better that way

If they destroyed the Darkweb in its entirety (let's assume they can, which is not set in stone), something more resilient and resistant would inevitably pop up in its place instead (like Monero instead of Bitcoin). There's some point of maximum effect, and it certainly lies somewhere between full control, when no criminals are any longer using this network, and complete elimination, when they start to use something else, with the outcome being essentially the same. Simply put, it is a matter of proper balance and choosing the lesser of two evils

[Harlot]

The thing about Harmon's Helix mixer is he introduced it as some form of anonymizing payments for criminals to take advantage to which make his service in itself as a form or accessory for the crime being committed, this thing alone will just make them guilty of a crime. For normal mixers who just promotes their mixing service as a way to protect your privacy is something that won't alarm anyone, yes it still might be used by some criminals but it doesn't raise any flags as they aren't really directly connected to any kind of crime. So mixers as a whole might not be affected here.

[el kaka22]

The weird part of these companies that will get caught will be the way they are not as anon as they think they are, your trace could be as cold as it could potentially be but you are a person and you know other people, one word and you will be on hook for watching by FBI or any other organization.

So, "mixers" could be safe for the user for a while, maybe not even that, but the owner is still one person and they could get caught very easily. Even silkroad was disbanded and they did basically everything right but with one or two mistakes and you could be at the end of the world and they will find you. So, I would say just because you think you have the tech behind all of this to save yourself, you should not do anything illegal anyway, they are illegal for a reason.

[exstasie]

Even silkroad was disbanded and they did basically everything right but with one or two mistakes and you could be at the end of the world and they will find you.

Mistake #1, administering the Silk Road from the US. You may have noticed Harmon (operator of Helix) did the same thing. Smarter operators are doing so from within countries that do not extradite to, or cooperate with, the US government. That makes it a completely different ball game.

The thing about Harmon's Helix mixer is he introduced it as some form of anonymizing payments for criminals to take advantage to which make his service in itself as a form or accessory for the crime being committed, this thing alone will just make them guilty of a crime. For normal mixers who just promotes their mixing service as a way to protect your privacy is something that won't alarm anyone, yes it still might be used by some criminals but it doesn't raise any flags as they aren't really directly connected to any kind of crime. So mixers as a whole might not be affected here. 

Mixers who don't advertise themselves as a money laundering service still have Fincen regulations to consider. They probably couldn't be charged with the conspiracy charges Harmon got hit with, but operating an unlicensed money transmitter could still be on the table. We can't know for sure until the US government makes their next move.

[Hydrogen]

Not many may be aware that proxies, vpns and tor nodes are often run by businesses with connections to intelligence agencies like the FBI, NSA, CIA. Its an industry standard for virtually anything IT related.

I think this point is a bit misleading. VPN's are regularly used to connect to a local network within a company and that type are very unlikely to be of interest to the intelligence agencies. Proxies can also be used for both good and bad. However TOR nodes tend to have a slightly different reputation and are not commonly used in general commercial enterprises. Grouping them all up is a bit unfair. In response to the main piece of news: these bitcoin mixers literally have no other purpose than to disguise the source of funds, which is pretty much the definition of money laundering and it was always going to end up badly for them. Kind of glad that law enforcement have finally taken some action, as it has been going on for years.

Security researchers have spent more than the last 10 years trying various methods to break TOR. Here's a classic example from 2007:

Security researcher intercepts embassy passwords from Tor

SEP 10, 2007

A security researcher who collected thousands of sensitive e-mails and passwords from the embassies of countries such as Russia and India blamed systems administrators on Monday for not using encryption to shield their traffic from snooping.

Dan Egerstad, a 21-year-old security researcher, revealed on Monday he was able to capture the information by setting up his own node in a peer-to-peer network used by the embassies to make their Internet traffic anonymous.

https://www.infoworld.com/article/2649832/security-researcher-intercepts-embassy-passwords-from-tor.html

Services like VPNs, proxies and TOR could be utilized to upload viruses, malware or conduct electronic attacks. Which means there will always be a motive for law enforcement and intelligence to have a vested interest in them. Their strategy for this has changed over time. In past years, they were more visible, open and heavy handed in their approach. These days their strategy revolves more around misinformation and stealth.

Mixers can serve a useful purpose of enhancing privacy without delving into criminal territory of full blown money laundering afaik.

I doubt that. KYC would completely negate the purpose of using a mixer in the first place.

People have been known to receive ads related to topics they mentioned out loud or through texts on phones. Also ads indexed according to items they recently bought in stores. Etc. AFAIK there are extensive networks of data mining which ID people using cookies, email addresses and other seemingly innocuous methods of tracking. Registering an email on a bitcoin faucet or allowing cookie tracking might be considered forms of KYC. A mixer wouldn't necessarily require a full KYC check. It could only need to participate in whatever information gathering networks exist, while disabling anonymizing services.

[exstasie]

I doubt that. KYC would completely negate the purpose of using a mixer in the first place.

People have been known to receive ads related to topics they mentioned out loud or through texts on phones. Also ads indexed according to items they recently bought in stores. Etc. AFAIK there are extensive networks of data mining which ID people using cookies, email addresses and other seemingly innocuous methods of tracking. Registering an email on a bitcoin faucet or allowing cookie tracking might be considered forms of KYC. A mixer wouldn't necessarily require a full KYC check. It could only need to participate in whatever information gathering networks exist, while disabling anonymizing services.

I agree people can be deanonymized through cookies and other leakage of identifying information through browsers, and that this can be used to tie BTC transactions to real world identities. However, that doesn't mean collecting browser fingerprints or cookies is sufficient to comply with Fincen regulations.

This ties back to the article in the OP:

Specifically, the investigation demonstrated that Mr. Harmon deliberately disregarded his obligations under the BSA and implemented practices that allowed Helix to circumvent the BSA’s requirements. This included a failure to collect and verify customer names, addresses, and other identifiers on over 1.2 million transactions.

[Emitdama]

They will require that he (and every other mixers in the US) collects those information from those who wants to get their coins mixed, so that in case there should be any case of hacking or such, they will be able to trace those people, even if they should make use of mixers to mix those coins to cover up.

I know that some people (just like me) are going to hate this, because they prefer having some privacy with their activities online, but these things are being done for security reasons, and I understand that. That’s why I never bother much, and after giving it a thought, I just agree with it. These laws don’t apply to every country, there are mixers that are in countries where there wouldn’t be laws like this one.