Mixer Detection in 2021

[titular]

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 Would they confiscate the funds too or just close your account once you had withdrawn your available balance?

Well if you enjoy your privacy while using btc you may reconsider. There are mixing services that would not raise the same flags as others. ChipMixer for example.

Either way, there are a number of protocols outside of mixing to increase anonymity.

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[shield132]

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 guess you mean Binance when saying major exchange because it has the highest volume. I would say that you never know what kind of funds you receive when someone sends you the money. Imagine, someone pays me $100 for something, why will I know that it's from mixer? When someone pays $100 cash, how do I know that exclusively that banknote was used for crime, murder, etc? You are only under "radar" when you do something bad. If you do something bad, then don't count weeks, you may get caught at any time.
Otherwise, don't worry. I have received mixed money on Binance years ago without any problems and don't even think that it will cause problems for me in future.

[o48o]

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.

I haven't even heard about this one and didn't find anything with quick googling. Could you please provide some examples/evidence about this so i can verify this? I mean i know that coinbase has closed accounts but i didn't ever see mixer as a reason.

[fiulpro]

Mixers are undeniably important for some people, they use them to protect their Privacy. But at the same time we have to understand that it's blockchain therefore all the data is stored forever that is how Bitcoin Fog case was undertaken, the data was analyzed for 10 years and the guy was identified and taken under arrest.
- If a exchange bans/ allows mixing services, it's their personal opinion
Even right now samourai wallet offers whirlpool but you have to add your whole node there at the same time mixing services are taken as both negative and positive, from saving user's privacy to helping some people hide their identities and get away, we cannot say anything here plus it better to be safe than sorry, even if you mix your coins you would use them for something and that way you can be tracked but now some mixers use a lot of users all together and you cannot identify where those coins went, you cannot pin point any user, but I believe you must stay away from mixers because the probability of your account getting banned is always there, it's better to not bet on it.

[witcher_sense]

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

The key thing to bear in mind is that everything that Chainanalysis says about transactions occurring is mostly based on their subjective interpretations and arbitrary assumptions, which means it often doesn't have a connection to reality, let alone legal validity. To be certain beyond reasonable doubt that a particular transaction is indeed coming from a mixer, they need to be involved in a mixing process directly, be a part of that transaction. The other transactions in which the blockchain analyst is not a direct participant cannot be viewed as illegal or coming from a particular service.

[ChipMixer]

In 2021, it's very hard to detect a transaction from a centralized mixing service like ChipMixer or such good reputed services.

This is incorrect. Each year more and more companies track transactions at blockchain and each year they get more resources from KYC exchanges. Being 2021 does not make it harder to detect. It makes it easier.

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 ?

It does not protect you from mixer detection.
Receiving private key protects you from timing deposit and withdrawal. For example - you deposit 1 mBTC now and you receive 1 mBTC chip created week ago. If you spend it right now attacker may guess you are one of ChipMixers customers who deposited 1 mBTC between now and week ago. If you spend it after month then amount of customers and possibilities grow.

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.

This is incorrect. Mixing protects your privacy as in how much you have and how you spend it.
Mask protects your health. If anyone can detect you using mask - is it useless? If shopkeeper forbids you to enter with mask - will you hide it or will you find different shop?

KYC exchanges will block your Bitcoins. Because you mixed them. Because you gambled. Because you received them from different country. Because you used Wasabi wallet or other forbidden software or service. Because you do not have full name and address of a person who paid you.

[yhiaali3]

I don't think there will be any problems for small amounts, most exchanges don't have any restrictions on small amounts either in withdrawals or deposits but they do have strict restrictions on large amounts where there is a possibility of money laundering, so I don't think any exchange will be interested in depositing amounts The small ones, whether they come from the mixer or not, of course there are exchanges that do not care at all about the source of the assets that are deposited, whether from mixers or not, but most of the large exchanges do not allow such things because government laws require them to do so.

[titular]

The key thing to bear in mind is that everything that Chainanalysis says about transactions occurring is mostly based on their subjective interpretations and arbitrary assumptions, which means it often doesn't have a connection to reality, let alone legal validity. To be certain beyond reasonable doubt that a particular transaction is indeed coming from a mixer, they need to be involved in a mixing process directly, be a part of that transaction. The other transactions in which the blockchain analyst is not a direct participant cannot be viewed as illegal or coming from a particular service.

This is exactly how I would view it. For an exchange to confiscate your funds, there would have to be undeniable evidence for them to freeze them. As you said, unless you were a part of the transaction you would have no way of knowing this. This makes me wonder what analysis tools they use to obtain this proof.

I find the case about Binance freezing funds used in a Wasabi Wallet to be extremely bizzare. How were they able to know that this transaction took place on their platform.

[witcher_sense]

This is exactly how I would view it. For an exchange to confiscate your funds, there would have to be undeniable evidence for them to freeze them. As you said, unless you were a part of the transaction you would have no way of knowing this. This makes me wonder what analysis tools they use to obtain this proof.

I find the case about Binance freezing funds used in a Wasabi Wallet to be extremely bizzare. How were they able to know that this transaction took place on their platform.

In my view, when it comes to "professional" blockchain analysis or mere observation of what is going on inside blockchain, no proof can be considered solid or undeniable because there is always more than one interpretation of a given transaction. Even if a blockchain surveillance firm claims that a sender and receiver could easily be identified, that doesn't make their interpretation less subjective. Transactions do not contain any personal data written in them, so any claim that a certain transaction was made by you is by default highly questionable. It can serve only as indirect evidence at best.

However, when you are interacting with the bitcoin blockchain in the wrong way, namely via third-party services such as centralized exchanges and others, you give observers so much information about yourself that you no longer can deny your involvement in particular transactions. Moreover, when using centralized services, you are being constantly surveilled and monitored, there is no way you can escape the surveillance, there is no chance you can avoid their prying eyes. That is precisely what happened to the Binance user that was "caught" withdrawing to his Wasabi Wallet. The thing is that he, like any other Binance user, was constantly surveilled by Binance staff, which means they tracked each of his transactions, be it a deposit to or a withdrawal from the exchange. One day they noticed that the said user made a withdrawal and later sent the funds to a CoinJoin transaction. They didn't like the fact that some user had tried to escape their surveillance by obfuscating the transaction. Once the user made another withdrawal, they assumed he was again using the Wasabi Wallet address for the transaction and froze his account. That is it.

[o_e_l_e_o]

Imagine getting your Coinbase account closed because of using a mixer, screw that.

Imagine using a centralized exchange which will close your account and steal your coins for no good reason. Screw that.

For an exchange to confiscate your funds, there would have to be undeniable evidence for them to freeze them.

They definitely do not need anything even close to undeniable evidence. They have a variety of algorithms monitoring your deposits, withdrawals, trading activity, etc., and if you trigger any one of those unknown algorithms then your account gets locked, along with all the coins on it. You can see endless reports of people having their Coinbase/Binance/wherever accounts locked for completely arbitrary reasons, or sometimes without being given a reason at all. You take a risk every time you deposit coins to a centralized exchange.

As is usual in threads on this topic, the vast majority of people look at the situation backwards. It is not the case here that centralized exchanges are in the right and mixed/coinjoined/gambled/whatever coins are the issue. Rather, the whole point of bitcoin is that people can do whatever they want with their own money, and centralized exchanges deciding to appoint themselves judge, jury, and executioner over their users and what they are and are not allowed to do with their own money is antithetical to bitcoin itself.

We should not be discussing about whether or not to mix your coins; we should be discussing about how we should stop using centralized exchanges who want to control bitcoin for their own profits.

[kryptqnick]

Freezing the account is one thing, but do exchanges really confiscate the money? I haven't used mixers, but my understanding is that if there's something an exchange doesn't like, it usually asks for some additional information to be submitted (KYC of some sort). Can they really just take the money because their algorithms flag something as suspicious? I don't mean whether they are able to do that because of course they are. I'm asking if reputable exchanges actually do that in practice, rather than temporarily freeze the money and ask for some documents.

[titular]

Freezing the account is one thing, but do exchanges really confiscate the money? I haven't used mixers, but my understanding is that if there's something an exchange doesn't like, it usually asks for some additional information to be submitted (KYC of some sort). Can they really just take the money because their algorithms flag something as suspicious? I don't mean whether they are able to do that because of course they are. I'm asking if reputable exchanges actually do that in practice, rather than temporarily freeze the money and ask for some documents.

From what I understand, exchanges will freeze the account, stopping it from making any further exchanges. Followed by them asking you to withdraw your balance. Essentially saying you are not welcome here anymore.

I personally haven't come across any verifiable accounts of people getting funds confiscated.

I hope I don't have to find out for myself one day.

[coupable]

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 ?

It does not protect you from mixer detection.
Receiving private key protects you from timing deposit and withdrawal. For example - you deposit 1 mBTC now and you receive 1 mBTC chip created week ago. If you spend it right now attacker may guess you are one of ChipMixers customers who deposited 1 mBTC between now and week ago. If you spend it after month then amount of customers and possibilities grow.

Well, it becomes obvious for me that using ChipMixer with its unique method won't save us from being detected.. From another side, if i well understood your explanation, by creating Chips with different fractions amounts, it would become more effecient to not being traced, yes? I mean if a mixed amount can be randomly splitted into smaller amounts in thge form of chips, wouldn't be harder to track? Let's say i want to mix 1BTC and the minimum available chip is for 1mBTC, isn't possible to create 12 chips for instance each one has a random amount and the receiver can chose the time to spend them and also the amount ; let's say i will spend 0.45 BTC from the total 1 BTC amount after one week , then after another 1 week spending the rest to different addresses.
I don't know if this is technically possible, i just think how this can be possible in a way or another .

[o_e_l_e_o]

Freezing the account is one thing, but do exchanges really confiscate the money?

If they freeze your account, then your money is essentially confiscated unless you jump through whatever hoops they demand of you. That is of course provided they give you any hoops at all, and don't just say "We can't discuss it pending our investigation" or something similar, which has happened many times in the past.

by creating Chips with different fractions amounts, it would become more effecient to not being traced, yes?

Correct. Depositing and withdrawing identical amounts (minus fees) from any mixer is bad for your privacy. With ChipMixer, you can withdraw different amounts at different times to obfuscate things as much as possible.

Let's say i want to mix 1BTC and the minimum available chip is for 1mBTC, isn't possible to create 12 chips for instance each one has a random amount and the receiver can chose the time to spend them and also the amount

Chip values are fixed at 0.001, 0.002, 0.004, 0.008, 0.016, 0.032, 0.064, 0.128, 0.256, 0.512, and so on.

You can withdraw any number and any combination of chips at once. So as per your example, you could withdraw 0.256 + 0.128 + 0.064 + 0.002 at once to withdraw 0.45 BTC in total, and leave the remaining 0.55 BTC behind to withdraw at one or more future dates.

[coupable]

Let's say i want to mix 1BTC and the minimum available chip is for 1mBTC, isn't possible to create 12 chips for instance each one has a random amount and the receiver can chose the time to spend them and also the amount

Chip values are fixed at 0.001, 0.002, 0.004, 0.008, 0.016, 0.032, 0.064, 0.128, 0.256, 0.512, and so on.

You can withdraw any number and any combination of chips at once. So as per your example, you could withdraw 0.256 + 0.128 + 0.064 + 0.002 at once to withdraw 0.45 BTC in total, and leave the remaining 0.55 BTC behind to withdraw at one or more future dates.

All the amounts you mentioned are known to be coming from ChipMixer wallet. The problem is that ChipMixer creates many Chipps in the same TX without a change address ; means like 1 BTC is splitted into Chipps amounts in one transaction which can be easly known that's made by CM and anyone spending from of those outputs is surely using CM and can be even tracked based on the chipps withdrawal.
I hope you are getting my point here. In addition to what CM manager said in his last message, in the ChipMixer ANN, Quiqseller explained this very well : https://bitcointalk.org/index.php?topic=1935098.msg58313016#msg58313016

[o_e_l_e_o]

-snip-

Sure, it is trivial to identify an output as coming from ChipMixer since their chip funding transactions are so distinctive. Their privacy model does not depend on this, though. All an adversary can say is that the output came from ChipMixer - they cannot link the output to a specific deposit to ChipMixer. This is similar to the privacy provided by coinjoin transactions, where an adversary can identify a coinjoin transaction, but cannot link a specific output to a specific input.

When I spend my bitcoin, I have no issues with the merchant seeing that I sent them coins directly from ChipMixer. All they know is that I used ChipMixer. They have no idea where my coins originally came from, who else I am paying, how much I am holding, my wallet addresses, and so on.

[coupable]

-snip-

Sure, it is trivial to identify an output as coming from ChipMixer since their chip funding transactions are so distinctive. Their privacy model does not depend on this, though. All an adversary can say is that the output came from ChipMixer - they cannot link the output to a specific deposit to ChipMixer. This is similar to the privacy provided by coinjoin transactions, where an adversary can identify a coinjoin transaction, but cannot link a specific output to a specific input.

Using any mixer in general isn't against any law and no worries if someone found using them (almost all of them). The problems start whn someone using the mixer is accused to do money laundering for instance and how the use of mixer can get him in more troubles. I know this is ot a CM responsability but me as a user, i think i should be aware of such a condition.
Note that this becomes a serious problem by the exchanges started enforcing identity verifications for all users, tracking becomes more easy than before.

When I spend my bitcoin, I have no issues with the merchant seeing that I sent them coins directly from ChipMixer. All they know is that I used ChipMixer. They have no idea where my coins originally came from, who else I am paying, how much I am holding, my wallet addresses, and so on.

If he doesn't know you in person, of course he would know nothing but you are using mixed coins. Let's say you bought something from someone and withdraw the CM chipps directly to his wallet, then this person is accused to launder money, once catched i think he will tell about you using a mixer. This case may often happen in all P2P deals in addition to exchange orders.

[o_e_l_e_o]

Let's say you bought something from someone and withdraw the CM chipps directly to his wallet, then this person is accused to launder money, once catched i think he will tell about you using a mixer.

Using a mixer or any other privacy enhancing technique (coinjoins, peer-to-peer trading, DEXs, Tor, encryption, etc.) is not evidence that you are laundering money, and anyone who claims such a thing is a moron.

I must say that whenever I spend bitcoin, either in person or online, they always come either directly or within 1 intermediary transaction from either ChipMixer or a coinjoin. I have never once had a problem with a merchant or retailer rejecting my coins, asking for more information about their source, refusing future purchases, closing my account with them, etc. As I've said above, users protecting their privacy is not the issue here. The issue is some centralized exchanges or payment processors trying to dictate what you can and cannot do with your own money. Avoid these third parties which are trying to turn bitcoin in to something it isn't, and life becomes much easier.

[goldkingcoiner]

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.

I think coinjoin detection might be a less bigger issue than it was before the new taproot update. And I am sure there is an algorithm to generate new bitcoin addresses so that you can't link the new addresses with mixer owned-addresses.

But then again, I am no heuristics analyst either. But I do have faith in the community developing better ways of sustaining bitcoins anonymity. Otherwise the governments and regulators would already have ruined the game for us.

[dkbit98]

The problems start whn someone using the mixer is accused to do money laundering for instance and how the use of mixer can get him in more troubles. I know this is ot a CM responsability but me as a user, i think i should be aware of such a condition.
Note that this becomes a serious problem by the exchanges started enforcing identity verifications for all users, tracking becomes more easy than before.

So the real problem is not ''dirty'' bitcoins, but centralized exchanges.
They can freeze your coins and accounts, and I even hear that CZ binance is now calling for more strict global crypto regulations, and no wonder when we is hanging out with his ex boss Bloomberg.
Solution for this is to use Bitcoin directly with merchants for any purchases, or use decentralized exchanges like Bisq or P2P for trading.
If most people would use mixers, coinjoins and other privacy tools, it would make any tracking useless and coin freezing impossible, because they can't freeze all accounts.
It's going to be very interesting soon when Taproot achieves wider adoption