Buying BTC - concern if been through a mixer?

[lunarlanding2021]

I am considering purchasing some BTC using one of the following sites:

a) Bisq (BitSquare)
b) Hodl Hodl
c) LocalCoinSwap
d) LocalBitcoins

I have discovered online that it is possible for persons to send BTC through a mixer and that if this is done, it may cause issues if attempting to later sell via an exchange.

If I purchase via one of the four sites above from a seller, is there any way to determine if the Sats which I purchase have been through a mixer in advance in case this might cause an issue at some later date if I wanted to sell via an exchange or if I wanted to try to obtain interest for stacked sats, which I believe is also possible.

Is this something which should be of concern?   

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[Streets 2.0]

I always think over and buy only on serious exchanges and have never had problems with buying or selling. Sometimes I had to wait a little during hot sales or vice versa on the rise, but in my opinion this is normal and should not be taken into account. In general, the time for buying, in my opinion, has not yet come, I think we will again fall to 30 thousand and from there we will already begin to grow. I'll buy it there

[o_e_l_e_o]

I have discovered online that it is possible for persons to send BTC through a mixer and that if this is done, it may cause issues if attempting to later sell via an exchange.

Some exchanges indeed take the idiotic view that any coins which have been mixed, coinjoined, or otherwise had their history obfuscated are "tainted". However, if you are trading on a centralized exchange then you will have to complete KYC anyway, which is usually enough to overcome this issue. But trading via a centralized exchange can result in your coins being frozen at any time for any reason anyway, regardless of where they've come from.

If I purchase via one of the four sites above from a seller, is there any way to determine if the Sats which I purchase have been through a mixer in advance in case this might cause an issue at some later date if I wanted to sell via an exchange or if I wanted to try to obtain interest for stacked sats, which I believe is also possible.

No, there is no way to know in advance. It would be possible on some of these sites to examine the history of the coins the other party deposits to the escrow address before you make your fiat payment, but if you choose to back out of the deal at that stage then you will be penalized for it. Although if you are planning on using a decentralized exchange to buy, then why would you plan to use a centralized exchange to sell?

[bitmover]

I have discovered online that it is possible for persons to send BTC through a mixer and that if this is done, it may cause issues if attempting to later sell via an exchange.

If I purchase via one of the four sites above from a seller, is there any way to determine if the Sats which I purchase have been through a mixer in advance in case this might cause an issue at some later date if I wanted to sell via an exchange or if I wanted to try to obtain interest for stacked sats, which I believe is also possible.

Is this something which should be of concern?   

I don't think you should be concerned yet. Exchanges are not worried about this, in general (however there have been some reports about it, but nothing to be concerned in my opnion). But in the future, as regulations advances, this might become a problem.

There is a discussion about "tainted coins". There is a very informative video from Antonopoulos where he explains about it:
https://www.youtube.com/watch?v=BILcJ3WtdLQ

He is basic saying that some exchanges might want to see the X past transactions of your address, to see if those coins have been through a mixer/casino.

The problem is that if exchanges look back all transactions, they will find all that almost all coins have been sometime inside a mixer service or a casino. So all coins would be tainted.

Then the solution for the exchanges is look about 4-5 transactions. So you could easily bypass this check, just making a few transactions inside your own wallet, to address you already control. You could just send them at 1 sat/byte (minimum fee) as you are transferring coins to yourself you have no hurry.

[o_e_l_e_o]

The problem is that if exchanges look back all transactions, they will find all that almost all coins have been sometime inside a mixer service or a casino. So all coins would be tainted.

This is why the whole "tainted" thing is completely nonsense.

An exchange has absolutely no way of knowing if coins which have been mixed, coinjoined, or whatever, were done so by you. Even if the coins came directly from a coinjoin transaction, you could have sold something to another party and given them your exchange address for payment. Further, the best evidence we have is that the vast majority of users are using these methods on completely clean bitcoin simply because they want to protect their privacy, and not because the coins have come from any illicit activity. The biggest source of coins passing through mixers have come directly from centralized exchanges, for example, from people not keen on some complete strange at a centralized exchange tracking their future transactions and ascertaining their entire financial history.

And how far back do they look? Look back far enough, and most coins can be "tainted" in some way or another. Look far enough in to the future, and literally every coin in active circulation will be "tainted". They can't block everything, or they would go out of business. So bounce a coin around 5 times and it is clean again? Utterly stupid.

I would suggest that if you are going to buy on a decentralized exchange, then you might as well sell on a decentralized exchange too and avoid all the massive risks which come with giving out your KYC details (considering most exchanges sell your data and/or have been hacked for KYC data). Or at least, find a centralized exchange which isn't going to arbitrarily lock your account and demand that you submit every detail of your life, a retina scan, and your colonoscopy report. As a bonus, you avoid all this taint nonsense altogether.

[Lorence.xD]

Is there a problem if it came from a mixer? Pretty sure that every coin has been tainted already and exchanges can't really be sure what they are going to do when the coins have some problem. With bitcoin circulating all over the Internet for a decade now, I think that we shouldn't worry too much about it.

[so98nn]

Interesting topic. Never thought there exists such things and we should be worried about that ?
So what if I am receiving coins from mixer? Are they considered like illegal or may be under suspicion? If so then how do I trust the exchangers from where I am buying the coins? What if they are also laundering the coins considering they have huge volume of coins moving here and there all the time.

It’s coin right? Does it really concerns if it’s from P2P method, Mixer, Exchanger or straight out of mining payout pools ?

[Jawhead999]

A centralized exchanges has it own jurisdictions or rules about the coins came from, if they had terms of forbid any coins came from casino or mixer... of course they could frozen your account until you submit your KYC. In the worse case your account could be banned since it's break their terms, but right now most of centralized exchanges didn't really care where your coins came from. However it will be a problem if in the future all centralized exchanges will forbid all coins came from mixer or casino, they will force anyone to submit KYC.

[lunarlanding2021]

The responses are greatly appreciated. 

No, there is no way to know in advance. It would be possible on some of these sites to examine the history of the coins the other party deposits to the escrow address before you make your fiat payment

So once purchased, I guess it must be reasonably easy to look at the BTC coin history and determine that it has been mixed/joined in the past. I don't know how that is determined, but I guess if you know what you're looking for in the history it's probably reasonably easy to determine.

I would suggest that if you are going to buy on a decentralized exchange, then you might as well sell on a decentralized exchange too and avoid all the massive risks which come with giving out your KYC details (considering most exchanges sell your data and/or have been hacked for KYC data). Or at least, find a centralized exchange which isn't going to arbitrarily lock your account and demand that you submit every detail of your life, a retina scan, and your colonoscopy report. As a bonus, you avoid all this taint nonsense altogether.

I haven't purchased BTC (or other coins) before - are there any advantages to using a centralised exchange? I'm not aware of any, other than perhaps it may be marginally cheaper, but if someone hodls for 20+ years (or for good), then the slight difference in price is neither here nor there.

If I had enough stacked at some point, then it appears that it is possible to obtain interest from centralised sites such as Celsius Network, BlockFi or Nexo. Perhaps though, again, it would be best to use reputable de-centralised sites to obtain interest? Any thoughts?

[o_e_l_e_o]

So once purchased, I guess it must be reasonably easy to look at the BTC coin history and determine that it has been mixed/joined in the past.

You can certainly track your coins back using a block explorer looking for signs of mixing or coinjoins (the latter being easier to spot than the former), but if coins have come from multiple sources, have been split/combined with other coins, or have been moved through other services, then it can be very difficult to tell.

I haven't purchased BTC (or other coins) before - are there any advantages to using a centralised exchange?

They are easier to use. Once you have signed up and completed KYC, then they are generally as simple as either funding your account with a bank transfer or credit card and hitting the "buy" button. With decentralized exchanges, you have to find someone else you want to trade with manually, they deposit the bitcoin to an escrow (usually), then you figure out how to pay them in fiat, and then they release the coins from escrow. It is more complicated and takes much longer than with a centralized exchange. The advantages are you don't have to trust a centralized platform with the security of your coins, and you don't have to compromise your privacy.

If I had enough stacked at some point, then it appears that it is possible to obtain interest from centralised sites such as Celsius Network, BlockFi or Nexo. Perhaps though, again, it would be best to use reputable de-centralised sites to obtain interest? Any thoughts?

I'm not aware of any decentralized platforms which allow you to keep control of your own coins while also earning interest. These centralized sites which offer interest do so by taking your coins and predominantly lending them out to third parties and collecting interest on the loans. Since they are completely unregulated unlike fiat banks which also lend out your money, you are accepting a significant degree of risk by using them.

[Kakmakr]

How far back are the Exchanges going to go back into the transaction history to enforce that requirement?  All coins are going to go through a Mixer eventually, so the Exchanges should then "ban" people's accounts, if the transaction history shows any mixing of coins and that will kill their business. 

I am registered with several online platforms where you have to deposit coins and then withdraw it, so I just flush the coins through these legitimate services and then Exchanges have no problem with it. (Obviously if these services use KYC ... you will be identified) 

[OcTradism]

I am considering purchasing some BTC using one of the following sites:

a) Bisq (BitSquare)
b) Hodl Hodl
c) LocalCoinSwap
d) LocalBitcoins

If you buy Bitcoin only to invest in Bitcoin. You can sell it on the same marketplaces you use to buy it.

If you want to trade your Bitcoin, you will have to send it to centralized exchanges that have better trading volume. If you do it, you must read their rules on Mixing, mixer, tumblers or Coin Join transactions.

If their rules have points for mixers, tumblers, Coin Join transactions, you must be careful and don't take risk. If you want to deposit, do with part of your Bitcoin amount.

Is this something which should be of concern?  

You can check your transaction hash with
- https://blockchair.com/bitcoin
- https://blockstream.info/
If your bought transaction is a Coin Join one, these block explorers will show details.

Reminder. Use block explorers to check your txhash will break your privacy.

[asyakashi]

what are the advantages of buying from a mixer site? It sounds like illegal not even in the market. Why don't you buy it for a carn? it will make you more confident with your balance and it's definitely more legal and reliable.

[o_e_l_e_o]

How far back are the Exchanges going to go back into the transaction history to enforce that requirement?

No one knows. It is completely arbitrary, and no exchange tells you exactly what they look for, and not just when it comes to mixers or coinjoins. Some look for coins with a history of casino or gambling site use. Some look for coins coming from various marketplaces. Some exchanges decide that certain patterns of deposits and withdrawals are shady. Some think that certain trading behaviors are shady. There are thousands of reasons exchanges will lock your account or freeze your coins, and they never tell you why. Just that you have triggered some unknown algorithm, and so now you have to hand over all your personal information to unlock your account. There are thousands of reports you can find on here, Reddit, Twitter, etc., of people who have had their exchange accounts locked for no known reason. This is part of the risk you take when you use centralized exchanges. Not your keys, not your coins.

If you want to trade your Bitcoin, you will have to send it to centralized exchanges that have better trading volume.

If you want to day trade, then sure, you need to use a centralized exchange. But trading bitcoin for altcoins just to own or hold is one of the strengths of decentralized exchanges, in that it can be done completely trustlessly and instantly without ever having to deposit your coins to an exchange's wallet or give up your privacy.

[bitmover]

If I had enough stacked at some point, then it appears that it is possible to obtain interest from centralised sites such as Celsius Network, BlockFi or Nexo. Perhaps though, again, it would be best to use reputable de-centralised sites to obtain interest? Any thoughts?

I'm not aware of any decentralized platforms which allow you to keep control of your own coins while also earning interest. These centralized sites which offer interest do so by taking your coins and predominantly lending them out to third parties and collecting interest on the loans. Since they are completely unregulated unlike fiat banks which also lend out your money, you are accepting a significant degree of risk by using them.

Some defi allows that, and they are somewhat decentralized.

There now this new buzzword (defi) and people are thinking they are offering free money. They are not.

Your coins (eth) or a btc pegged token gets locked into a smartcontract and you will earn interest, from 6 to 100% per year.
But as you pointed out, that money is not for free. You are ezposing yourself to many risks: smartcontract risk (a bug may lead to losses), token risk (stable coins or wrapped btc might no be pegged ) or even a scam.

There are some defi which are scam. Even in a decentralized smartcontract the code might be malicious. Open source code means nothing until it is audited by someone.

Personally, I hold my btc in my wallet , I never get any interest from it  and iam very satisfied with the price performance. No need for 6% interest rate for more risk.

[khaled0111]

You can check your transaction hash with
- https://blockchair.com/bitcoin
- https://blockstream.info/
If your bought transaction is a Coin Join one, these block explorers will show details.

I doubt a regular user can find out if his coins were mixed just by tracking the address history on a block explorer. Even the biggest crypto exchanges wich have a lot of resources cooperate with blockchain analysis companies like Chainalysis to help them with this.
Anyway, I don't think this is something to worry about if you can prove you bought the coins after it was mixed when the exchange asks you about the source of your funds.

[o_e_l_e_o]

You are ezposing yourself to many risks: smartcontract risk (a bug may lead to losses), token risk (stable coins or wrapped btc might no be pegged ) or even a scam.

But in even in these cases, you do not have control of your own coins. As you point out, you have to deposit them to a smart contract address, swap them for a pegged token, wrap them on another chain, and so on. In all of these cases, you no longer own bitcoin in your wallet which you can spend as you like. You only have to take a look at the ICO craze to see just how many coins or tokens had either accidental or deliberate fatal bugs in them, which led to the coin either collapsing or the owner using it to scam. My favorite example was a coin called Oyster Pearl (PRL), which was shilled heavily on the altcoin boards, on Reddit, on Twitter, etc., and peaked with a market cap of $200 million. Then the creator activated a piece of code which no one had noticed which allowed him to print 3 million brand new tokens out of thin air, gave them to himself, dumped them all immediately, and ran off with the profits.

Any time you wrap your bitcoin, or swap it for a token, or deposit it to smart contract, etc., you assume a similar risk.

Anyway, I don't think this is something to worry about if you can prove you bought the coins after it was mixed when the exchange asks you about the source of your funds.

First of all, why should I have to prove where my coins came from? The whole point of bitcoin is to not trust centralized third parties, not hand over your entire financial history on their every whim. Second of all, what if you can't prove it? What if I sold something to a friend or acquaintance for the bitcoin in question? Or what if I traded for them peer to peer directly with another person? No exchange history, no receipts, no screenshots, no bank statements, etc.

Exchanges should not be enforcing these completely arbitrary rules, and we should not be supporting exchanges which do.

[Yogee]

Hehe what if almost every bitcoin trader, investor, and regular user would resort to coinjoin and mixing services? That would be a pain for exchanges that would flag these transactions. They cannot afford to block all of them so they would probably choose force KYCing all of their users. That would be messy but it will be good for decentralized exchanges.

[Anonylz]

I would not have thought of this, although I only buy directly from exchange, still I find  this very important topic, assuming this exchanges are into checking every btc transacted that must be a tedious work on their part, I know platforms like bisq and localbitcoins have many users and most likely this users are trading their btc on centralized exchange as well, this won't be easy for them.

[Asuspawer09]

I am considering purchasing some BTC using one of the following sites:

a) Bisq (BitSquare)
b) Hodl Hodl
c) LocalCoinSwap
d) LocalBitcoins

I have discovered online that it is possible for persons to send BTC through a mixer and that if this is done, it may cause issues if attempting to later sell via an exchange.

If I purchase via one of the four sites above from a seller, is there any way to determine if the Sats which I purchase have been through a mixer in advance in case this might cause an issue at some later date if I wanted to sell via an exchange or if I wanted to try to obtain interest for stacked sats, which I believe is also possible.

Is this something which should be of concern?   

I guess it is for some exchanges or wallets, without any valid reason I don't think you really need to used mixers at all since transactions could work well without these mixers in exchanges and wallets.

Just to be safe because I have some experience especially in a centralized wallet or exchanges you might encounter some problems if it comes from suspicious addresses.

It happened to me but not actually related to the mixer but when my wallet received funds from a gambling website it register as suspicious, and they lock my funds, maybe because they think that it comes to from an illegal fund.