Mixer Detection in 2021

[thom88]

I am wondering, whether what I read online makes much sense in regards to exchanges "banning" mixing services.
I tried it and it seems not. I have tried to mix very small amounts through various mixers and used an account on a major exchange to see wheter they will have a problem with it (as they claim) or not.
Fact is no issues after weeks.

I wonder if in 2021, with the level the mixers have reached with delayed payouts etc., it is still possible to detect wheter a UTXO has been created by a mixing transaction or not.

I have no interest in mixing coins but care for analytical reasons only. I (maybe someone does) would not know what heuristic approach would be working where you don't have uncertainty to an extent where it makes no sense to call it information.

[DaveF]

Which exchangess? Most of the US based ones, like Coinbase & Gemini will close your account if they think funding is coming from a mixer. There are lots of discussions about that happening here and on many other sites.

Other ones, in other parts of the world, who knows. Depends on their mood and how much BTC.

Also, if you are not doing a straight BTC -> fiat exchange may be a bit less strict. Where some others, really don't care at all.

As for if it's from a mixing transaction or not. Depends who you ask: https://bitcointalk.org/index.php?topic=1935098.msg58313016#msg58313016

-Dave

[Fortify]

I am wondering, whether what I read online makes much sense in regards to exchanges "banning" mixing services.
I tried it and it seems not. I have tried to mix very small amounts through various mixers and used an account on a major exchange to see wheter they will have a problem with it (as they claim) or not.
Fact is no issues after weeks.

I wonder if in 2021, with the level the mixers have reached with delayed payouts etc., it is still possible to detect wheter a UTXO has been created by a mixing transaction or not.

I have no interest in mixing coins but care for analytical reasons only. I (maybe someone does) would not know what heuristic approach would be working where you don't have uncertainty to an extent where it makes no sense to call it information.

Your small scale testing is unlikely to raise any red flags because so much cryptocurrency is flowing around and intermingling all the time, it wouldn't make sense to ban people for the odd occasion. The people who will feel these sort of bans are the large scale or regular people where almost all of their transactions are inbound from identifiable mixer addresses. We're talking about people who have many dozens of transactions, probably involving fairly large sums, that fit the profile of someone who is trying to clean their money. One of the big benefits of Bitcoin is traceability so if you have intelligence on mixer addresses and have a lot of activity giving you visibility on "normal" transactions (aka a large exchange) then it's theoretically possible to make some educated connections.

[titular]

Which exchangess? Most of the US based ones, like Coinbase & Gemini will close your account if they think funding is coming from a mixer. There are lots of discussions about that happening here and on many other sites.

Other ones, in other parts of the world, who knows. Depends on their mood and how much BTC.

Also, if you are not doing a straight BTC -> fiat exchange may be a bit less strict. Where some others, really don't care at all.

As for if it's from a mixing transaction or not. Depends who you ask: https://bitcointalk.org/index.php?topic=1935098.msg58313016#msg58313016

-Dave

Meaning they will confiscate your funds in the process? Or will they give them back and just say you're not welcome here anymore?

Quite curious.

[20kevin20]

I think mixers are easy to detect when the transaction either comes directly from e.g. a CoinJoin or from a known mixer's wallet. I've never studied mixing heuristic analysis but I think it's not impossible to find at least few of the addresses a mixer owns?

Anyway, I think the easiest way to hide this history is just bouncing your mixed BTC from address to address. After a few days of every-now-and-then bounces, I doubt anyone will have a clue. Perhaps this is a tactic also used by mixers?

I'd be curious to know the answer as well. There most likely still are patterns through which they can find the origin of an address's coins.

[titular]

Anyway, I think the easiest way to hide this history is just bouncing your mixed BTC from address to address. After a few days of every-now-and-then bounces, I doubt anyone will have a clue. Perhaps this is a tactic also used by mixers?

This tactic would be no match for a standard blockchain analysis tool. They would easily be able to follow that trail of transactions. The key is to use all of the privacy features that some of these new-age mixers present. This includes changing output values to keep any analysis tool from matching up inputs and outputs.

But bouncing transactions around in such a rudimentary way would be highly ineffective.

[no-ice-please]

Which exchangess? Most of the US based ones, like Coinbase & Gemini will close your account if they think funding is coming from a mixer. There are lots of discussions about that happening here and on many other sites.

Other ones, in other parts of the world, who knows. Depends on their mood and how much BTC.

Also, if you are not doing a straight BTC -> fiat exchange may be a bit less strict. Where some others, really don't care at all.

As for if it's from a mixing transaction or not. Depends who you ask: https://bitcointalk.org/index.php?topic=1935098.msg58313016#msg58313016

-Dave

Yes I guess that makes a lot of sense as US based exchanges are under very strict scrutiny and pressure to live up to compliance requirements. I can think of a good number of exchanges that wouldn't care at all. At the same time those are also exchanges where you sometimes fear that they might have closed their doors the next morning you wake up.

[24Kt]

Which exchangess? Most of the US based ones, like Coinbase & Gemini will close your account if they think funding is coming from a mixer. There are lots of discussions about that happening here and on many other sites.

Other ones, in other parts of the world, who knows. Depends on their mood and how much BTC.

Also, if you are not doing a straight BTC -> fiat exchange may be a bit less strict. Where some others, really don't care at all.

As for if it's from a mixing transaction or not. Depends who you ask: https://bitcointalk.org/index.php?topic=1935098.msg58313016#msg58313016

-Dave

Yes I guess that makes a lot of sense as US based exchanges are under very strict scrutiny and pressure to live up to compliance requirements. I can think of a good number of exchanges that wouldn't care at all. At the same time those are also exchanges where you sometimes fear that they might have closed their doors the next morning you wake up.

Also, the OP is talking small amount only, so maybe, that is the reason why it was not flagged down because the exchange maybe just let it pass. But if you are talking of good amount of money, that's when you start getting nervous as the exchange may double check your transaction. So I believe, this is a case to case basis. Don't get too confident if initially, the exchange didn't flag you down, and you're thinking that next they won't because they may flag you next time.

[btc_angela]

Which exchangess? Most of the US based ones, like Coinbase & Gemini will close your account if they think funding is coming from a mixer. There are lots of discussions about that happening here and on many other sites.

Other ones, in other parts of the world, who knows. Depends on their mood and how much BTC.

Also, if you are not doing a straight BTC -> fiat exchange may be a bit less strict. Where some others, really don't care at all.

As for if it's from a mixing transaction or not. Depends who you ask: https://bitcointalk.org/index.php?topic=1935098.msg58313016#msg58313016

-Dave

Meaning they will confiscate your funds in the process? Or will they give them back and just say you're not welcome here anymore?

Quite curious.

That's possible that you might lose your bitcoin, this is one case that Binance caught someone using a Wasabi.



https://twitter.com/bittlecat/status/1207621591820951552

So most top exchange can detect it: Binance's partnership with Chainanalysis to detect "Dirty" Coins...

Maybe you were successful with your little experiment, however, it doesn't mean that they are not going to look at your account in the future. And then when you least expected, they will suddenly freeze your account or worst confiscate it.

[titular]

So most top exchange can detect it: Binance's partnership with Chainanalysis to detect "Dirty" Coins...

Maybe you were successful with your little experiment, however, it doesn't mean that they are not going to look at your account in the future. And then when you least expected, they will suddenly freeze your account or worst confiscate it.

But how in the world are they going to say that mixed coins just 'arent valid'.

For example, if I cut grass for Bitcoin and one of my clients is a privacy enthusiast who regularly uses mixers for his stack.

What happens when I try to deposit these? My account is now frozen? Bitcoin gone?

This just doesn't seem right. I'm trying to wrap my head around how they would be able to track something like this. Someone educate me, please.

[coupable]

In the worst cases, if exchanges as well as governments are able to track a transaction to know it's coming from a mixer, mixing in general will be useless. However, i think about Chipmixer who has the only mixing kind service as the user will receive private keys to spend from instead of a direct transaction to his wallet. Would they be able to trace it also ?

[20kevin20]

For example, if I cut grass for Bitcoin and one of my clients is a privacy enthusiast who regularly uses mixers for his stack.

What happens when I try to deposit these? My account is now frozen? Bitcoin gone?

This just doesn't seem right. I'm trying to wrap my head around how they would be able to track something like this. Someone educate me, please.

It's the fact that Bitcoin is lacking fungibility, which I think will have quite big impacts over the long run. Your example is just one of so many that we could give. This is the main issue I wish I never met with BTC, and unfortunately the only solution is.. moving away from Bitcoin to a more privacy-focused coin as long as you want your coins to be fungible.

Your Bitcoins are now being flagged every day by Chainalysis. Today they're clean, maybe tomorrow they're dirty. The algorithms they use and how they get to tag coins in a certain way.. who the hell knows? The thing is, your 1 BTC is unfortunately not equal to my 1 BTC and I think this is honestly one of the most serious issues of Bitcoin that haven't been adressed yet. Lots of people mention mixers and Wasabi, but they forget that once I take that route, I'm gonna be 100% considered a suspect/criminal by blockchain analysis companies and tools.. because unfortunately today is the day privacy is seen as a crime.

[titular]

In the worst cases, if exchanges as well as governments are able to track a transaction to know it's coming from a mixer, mixing in general will be useless. However, i think about Chipmixer who has the only mixing kind service as the user will receive private keys to spend from instead of a direct transaction to his wallet. Would they be able to trace it also ?

I was pondering this as well.

However, I believe it is the round number amounts in the wallets that may be of some issue as this is quite easy to identify. Then again, I am not sure how this would look from an exchange's point of view. It is also unique that the keys are funded prior to your deposit which adds a layer of obfuscation.

How would this be different for mixers like Tornado Cash on the Ethereum network?

[thom88]

Which exchangess? Most of the US based ones, like Coinbase & Gemini will close your account if they think funding is coming from a mixer. There are lots of discussions about that happening here and on many other sites.

Coinbase & Binance for example

Your small scale testing is unlikely to raise any red flags because so much cryptocurrency is flowing around and intermingling all the time, it wouldn't make sense to ban people for the odd occasion. The people who will feel these sort of bans are the large scale or regular people where almost all of their transactions are inbound from identifiable mixer addresses. We're talking about people who have many dozens of transactions, probably involving fairly large sums, that fit the profile of someone who is trying to clean their money. One of the big benefits of Bitcoin is traceability so if you have intelligence on mixer addresses and have a lot of activity giving you visibility on "normal" transactions (aka a large exchange) then it's theoretically possible to make some educated connections.

What is a Mixer address? mixers use each address 1 time as far as I know and have seen. I don't see how this is still applicable in 2021. It might have been in the past.

I think mixers are easy to detect when the transaction either comes directly from e.g. a CoinJoin or from a known mixer's wallet. I've never studied mixing heuristic analysis but I think it's not impossible to find at least few of the addresses a mixer owns?
Anyway, I think the easiest way to hide this history is just bouncing your mixed BTC from address to address. After a few days of every-now-and-then bounces, I doubt anyone will have a clue. Perhaps this is a tactic also used by mixers?

I'd be curious to know the answer as well. There most likely still are patterns through which they can find the origin of an address's coins.

.

Same goes for coinjoin. In the past wasabi used to out themselves by resusing some of the change addresses but now, all there is left is to label a tx as a potential coinjoin. there is no certainty (as with all heuristic approaches). The bouncing is very easy to track in any graphical display of your transaction history.

Anyway, I think the easiest way to hide this history is just bouncing your mixed BTC from address to address. After a few days of every-now-and-then bounces, I doubt anyone will have a clue. Perhaps this is a tactic also used by mixers?

This tactic would be no match for a standard blockchain analysis tool. They would easily be able to follow that trail of transactions. The key is to use all of the privacy features that some of these new-age mixers present. This includes changing output values to keep any analysis tool from matching up inputs and outputs.

But bouncing transactions around in such a rudimentary way would be highly ineffective.

This is a good point. So as I see, randomized outputvalues with delayed payouts. How can chainanalysis or other analytical services still claim that certain TX is from a mixer. I just don't see how but maybe someone can reassure that it still works.

Overall, my question is really just that: Can one rely on this information by analytical services or not. "Known wallet" stuff is no longer applicable as from what I have seen how mixers work in 2021. Hence in the title "2021". I know it was much easier years ago.

How can Chainanalysis tell that this is not a "legit" transaction but a mixing service.

[no-ice-please]

Which exchangess? Most of the US based ones, like Coinbase & Gemini will close your account if they think funding is coming from a mixer. There are lots of discussions about that happening here and on many other sites.

Other ones, in other parts of the world, who knows. Depends on their mood and how much BTC.

Also, if you are not doing a straight BTC -> fiat exchange may be a bit less strict. Where some others, really don't care at all.

As for if it's from a mixing transaction or not. Depends who you ask: https://bitcointalk.org/index.php?topic=1935098.msg58313016#msg58313016

-Dave

Yes I guess that makes a lot of sense as US based exchanges are under very strict scrutiny and pressure to live up to compliance requirements. I can think of a good number of exchanges that wouldn't care at all. At the same time those are also exchanges where you sometimes fear that they might have closed their doors the next morning you wake up.

Also, the OP is talking small amount only, so maybe, that is the reason why it was not flagged down because the exchange maybe just let it pass. But if you are talking of good amount of money, that's when you start getting nervous as the exchange may double check your transaction. So I believe, this is a case to case basis. Don't get too confident if initially, the exchange didn't flag you down, and you're thinking that next they won't because they may flag you next time.

I don't think the amount of money matters that much when an exchange has outlined a clear and strict policy. They have done that for a reason then. Particularly those US based exchanges are most likely closely cooperating with law makers and law enforcement so there wouldn't be any exceptions to the rule unless something goes undetected, which might rather be the case for smaller amounts than for bigger amounts of money.

[Pffrt]

It depends on whether they can trace or not. Last year or few more months ago, Binance had seized/locked fund which was supposed to be mixed with wasabi wallet if I'm correct. Most of the exchanges will do the same.
But, you are right. In 2021, it's very hard to detect a transaction from a centralized mixing service like ChipMixer or such good reputed services.

[Leviathan.007]

Regarding mixers and mixing services as far as I know all the famous us-based exchanges such as coinbase will close your account or give you a strong warning whenever they find out that you are trying to use the mixed coins on their platform that's because of what think about mixing and people who mix their coins they don't care if you only mix the coin for your own privacy they will think you mix the coins for doing criminal stuff such as money laundering, that's what they think about mixing and not only on 2021 but the detection of the mixed coins were happening even before 2011 as far I know.

[DeathAngel]

I’ve never used a mixer before & judging by some of the comments here I don’t think I ever will. Imagine getting your Coinbase account closed because of using a mixer, screw that. Would they confiscate the funds too or just close your account once you had withdrawn your available balance?

[Findingnemo]

I am wondering, whether what I read online makes much sense in regards to exchanges "banning" mixing services.
I tried it and it seems not. I have tried to mix very small amounts through various mixers and used an account on a major exchange to see wheter they will have a problem with it (as they claim) or not.
Fact is no issues after weeks.

I wonder if in 2021, with the level the mixers have reached with delayed payouts etc., it is still possible to detect wheter a UTXO has been created by a mixing transaction or not.

I have no interest in mixing coins but care for analytical reasons only. I (maybe someone does) would not know what heuristic approach would be working where you don't have uncertainty to an extent where it makes no sense to call it information.

It will take months or even years for them to identify if your trading volume is very low under their radar and the special investigation will be taken only if the funds are too huge so there is no wonder that your account on the banned exchanges may work for next few months.

Now we are talking about the context its not very easy to find the transaction based on the tracking alone that is where the regulation will plays a role and the mixing service itself have to expose them if I am not wrong.

[coupable]

In the worst cases, if exchanges as well as governments are able to track a transaction to know it's coming from a mixer, mixing in general will be useless. However, i think about Chipmixer who has the only mixing kind service as the user will receive private keys to spend from instead of a direct transaction to his wallet. Would they be able to trace it also ?

I was pondering this as well.

However, I believe it is the round number amounts in the wallets that may be of some issue as this is quite easy to identify. Then again, I am not sure how this would look from an exchange's point of view. It is also unique that the keys are funded prior to your deposit which adds a layer of obfuscation.

Well i understand your concerns but I think you are somehow missing the part about how mixing works within Chipmixer in the most aonymous way ; The amount you want to mix will be sent to chipmixer system and you get either one chip with the full amount which you may want to transfer later to your own address to avoid tracability based on sent amount, or you can split the chip amount into smaller chipps which can also be transfered seperateley to your own address.
Maybe you should try it by yourself to check that it's really an effecient way to do mixing.

How would this be different for mixers like Tornado Cash on the Ethereum network?

Just follow the same technique of ChipMixer and it should work fine with ethereum except that it's not possible to transfer amounts from different chipps at the same time because it's technically impossible with ethereum to spend from multiple inputs or to different outputs.