Do exchanges freeze transfers from mixers ?

[Lucius]

If crypto exchanges begin to rigorously analyze all transactions, they could very quickly run out of a significant portion of revenue, as only virgin mined coins can be considered 100% clean - and we can only guess how much BTC has gone through various mixers, casinos or been hacked. I remember reading before that as much as 13% of BTC wallets were tainted with BTC that once went through Silk Road, and I wouldn’t be surprised if the percentage of those that went through the mixer was much higher.

I personally wouldn’t dare send larger amounts from the mixer directly to the crypto exchange (CEX), because I don’t think it’s just a question of where BTC comes from, but also whether someone sent $100 or $10 000 - small transactions probably mostly go below the radar.

[o_e_l_e_o]

If crypto exchanges begin to rigorously analyze all transactions, they could very quickly run out of a significant portion of revenue, as only virgin mined coins can be considered 100% clean

This is another good point.

If you look back far enough, then according to centralized exchanges most bitcoin in circulation has been "tainted" in some way - be it from a casino or sportsbook, darknet market, scam, hack, DEX, mixer, coinjoin, or any of the dozens of other completely arbitrary reasons they decide a coin is tainted. If we go far enough in to the future, then every bitcoin in circulation will be tainted in such a way. If there is a coinjoin with 49 clean inputs and 1 tainted input, then all the outputs are tainted because you cannot determine where the tainted coins went. If you consolidate 100 clean BTC with 1 tainted BTC, then you now have 101 tainted BTC, since you cannot determine which coin is the tainted one.

Now, obviously exchanges cannot turn down every coin or they would have no business, so where do they draw the line? Coins coming directly from a casino are tainted. So what if I send the coins to my wallet first and then to the exchange? What if I bounce the coins between 5 different wallets first? Does the exchange look back 1 transaction? 5 transactions? 10? 100? It is all completely arbitrary and frankly stupid.

We should not be accepting these arbitrary rules and limitations which exchanges are dictating to us.

[Lucius]

If you look back far enough, then according to centralized exchanges most bitcoin in circulation has been "tainted" in some way - be it from a casino or sportsbook, darknet market, scam, hack, DEX, mixer, coinjoin, or any of the dozens of other completely arbitrary reasons they decide a coin is tainted.

I have to admit that this reminded me of one conversation with a person who had a serious intention to invest in Bitcoin about 3 years ago, but after several months of research it was precisely this issue that emerged as crucial. One simply wondered for a reason whether it could happen that the BTC he buys would be marked as tainted in the future and that in that way he would be left without everything. The only thing I could say then (and to be absolutely sure that this would not happen) was the advice to buy BTC directly from the miners.

If we go far enough in to the future, then every bitcoin in circulation will be tainted in such a way.

It may be the curse of any currency, because it is used by good and bad people, and perhaps the best argument to fight against being abused with the argument "you have tainted coins" is to stick to the proven fact that most banknotes are contaminated with countless illegal activities, and yet no one checks them when we pay with them.

We should not be accepting these arbitrary rules and limitations which exchanges are dictating to us.

Of course, we should not accept every nonsense that they try to impose (exchanges), but I think that they do not do such things because they want to, but because the law increasingly forces them to play detectives and look for anything suspicious. The problem is that they want to know everything, and when (if) they become more aggressive, users may start using DEX more.

[o_e_l_e_o]

I have to admit that this reminded me of one conversation with a person who had a serious intention to invest in Bitcoin about 3 years ago, but after several months of research it was precisely this issue that emerged as crucial. One simply wondered for a reason whether it could happen that the BTC he buys would be marked as tainted in the future and that in that way he would be left without everything. The only thing I could say then (and to be absolutely sure that this would not happen) was the advice to buy BTC directly from the miners.

Well, if you buy and withdraw from a centralized exchange such as Binance or Coinbase, then that exchange would have a hard time in the future refusing to accept the coins they sent you because they were "tainted" without admitting that either they are laundering money or the entire concept of taint is completely flawed and pointless, as we all know it is. Or the other option is to not use centralized exchanges at all. I have literally never once ran in to a problem with my extensively mixed or coinjoined coins not being accepted.

Of course, we should not accept every nonsense that they try to impose (exchanges), but I think that they do not do such things because they want to, but because the law increasingly forces them to play detectives and look for anything suspicious.

Absolutely it comes from higher up than the exchanges themselves, but the exchanges do absolutely nothing to fight it, and instead opt to sell out their users with zero resistance because that is what guarantees them profits. Can you imagine where we would be right now if the US government had said "You must KYC everybody" and every major exchange had said "No, we don't want to do that", challenged them in court, moved their businesses to avoid these laws, started offering real DEX and peer to peer methods of trading (not the fake scam DEX which still requires KYC like Binance), and so on.

The exchange didn't make these rules, but they are the ones who are implementing them without a second though or putting up the slightest fight against them.

[arabspaceship123]

I'm sorry I didn't reply quicker I didn't expect these numbers of responses. I've read them so thanks for what you've written here's what I've decided to do. If exchanges freezes accounts you haven't got a chance proving where they came from so they'll cheat to keep them. It isn't worth taking risks by sending mixed coins to exchanges even if you've sent them to your wallet first.

I'll use Chipmixer for mixing coins to my wallet instead of taking chances with exchanges. I'll try it soon for the first time.

There was a case about a year ago, when binance froze the account of a user cause the funds were from a coin mixing service. It was later unfrozen.
Centralized exchanges can freeze your account for different reasons according to their ToS, which you agree to when you sign up. And they are regulated, so they comply to government policies.

I'd like to know what happens to your coins if you can't unlock the account.

What you see in your account is just numbers put in by the exchange and not really the coins, if anbaccount is frozen, the number of bitcoins in it would likely stay the same, but what is done with the actual coins can not be ascertained.
Of course the exchange would be able to provide the funds, should your account need to be unfrozen.

How's it possible proving it's your funds by tracing where it's sourced from when it's from mixing?

Ideally, do not use centralized exchange to transact or to store funds, especially if you are privacy inclined.

[The Cryptovator]

Every centralized exchange has dangerous terms which are "suspicious transaction". So they might detect transactions from the mixer as suspicious transactions. Although this isn't the right reason to freeze our coins, they might do it. If I have to use a mixer for any reason, I won't make a direct deposit into the centralized exchange. First I will move my funds to my fresh address and then move to the exchange. Not sure if it's safe since they could track the transactions, but in case of refund, they would do it at in same address. So that I might get back at least. But I don't think usually they will freeze funds unless the fund wasn't stolen. And most likely they won't track if you use premium and reputable mixers.

[stomachgrowls]

Every centralized exchange has dangerous terms which are "suspicious transaction". So they might detect transactions from the mixer as suspicious transactions. Although this isn't the right reason to freeze our coins, they might do it. If I have to use a mixer for any reason, I won't make a direct deposit into the centralized exchange. First I will move my funds to my fresh address and then move to the exchange. Not sure if it's safe since they could track the transactions, but in case of refund, they would do it at in same address. So that I might get back at least. But I don't think usually they will freeze funds unless the fund wasn't stolen. And most likely they won't track if you use premium and reputable mixers.

Even using up known or reputable mixers but still im not really that confident on pushing transactions through those kind of system or method because i do feel uncomfortable because of the possible risk ahead.

Im aint doing illegal and do selcomly make use of mixers but same as you had mentioned which sending it first on fresh address then this is mostly
ive been doing so that at least i do able to recover up something if problem occurs.

So its really a matter of choice but most of the time they dont really actually make out some problems related into this one.

[Woodie]

I haven't used mixers so don't know if exchanges like Binance freezes your accounts because they've been funded from mixer linked addresses.

An exchange such as Binance won't flag such a transaction maybe only in special cases if the devs or say a compromised wallet owner can prove ownership then can they take necessary steps but I have used an exchange like flixio (trade.finxflo.com/trade) which requires you to whitelist both your depositing and withdrawing addresses before moving your coins to the exchange and failure to do so could amount to freezing or forfeiting such coins.

[arabspaceship123]

That's what I've picked up from the thread if you're mixing then the coins shouldn't be sent to exchanges because they've used suspicious transactions terms for freezing coins. If I'm going to use mixers I'm sending my coins to my wallet they'll never be sent to exchanges because I won't be taking chances.

Every centralized exchange has dangerous terms which are "suspicious transaction". So they might detect transactions from the mixer as suspicious transactions. Although this isn't the right reason to freeze our coins, they might do it. If I have to use a mixer for any reason, I won't make a direct deposit into the centralized exchange. First I will move my funds to my fresh address and then move to the exchange. Not sure if it's safe since they could track the transactions, but in case of refund, they would do it at in same address. So that I might get back at least. But I don't think usually they will freeze funds unless the fund wasn't stolen. And most likely they won't track if you use premium and reputable mixers.

[Kyraishi]

I haven't used mixers so don't know if exchanges like Binance freezes your accounts because they've been funded from mixer linked addresses. I'd like to know what happens to your coins if you can't unlock the account.

How's it possible proving it's your funds by tracing where it's sourced from when it's from mixing?

You simply can't prove anything.

With or without mixing, your coins should be pseudoanonymous and it should be pretty much impossible to trace back.

Especially if you use a good mixer, this should be a non-issue given that the whole point of a mixer is to obfuscate your tracks.

[arabspaceship123]

I've found ]Jambler's website saying they've got systems checks so it's harder using stolen bitcoins. Can you trust it? Is it one of the most secure mixers?