Are Crypto Privacy Coins and Mixers Illegal ?

[Hydrogen]

Privacy coins and mixers are designed and engineered to make transactions which conceal the identity of end users, allowing them to maintain a relative degree of anonymity.

While many who are not knowledgeable overreact assuming sinister motives are involved. Privacy coins and mixers are no different from browsing the internet with an adblocker. Most people do not want the fuss of having their transactions being scrutinized by random 3rd parties who will spam them with nonsense advertisements related to their latest purchases. Most also do not want their data sold for profit, if they can help it. This leads to cases of moral and acceptable utilization of privacy coins and mixers.

The complexity and coding of most privacy coins and mixers is typically not suitable for criminal applications. Using apps which leave digital footprints across the internet are not a good method for laundering money. Gold and cash are king when it comes to conducting criminal transactions.

At the moment, privacy coins and mixers have no specific laws which make them illegal. Most of the action taken against coins and mixers have been under the direction of regulatory bodies like the SEC. Which have been taking action, without having to prove anything illegal occurred in court. Or even having to prove that any laws were violated.

While that could change as AML (anti money laundering) proposals are considered. Which might eventually deem mixers and privacy coins illegal.

There are no specific laws or regulation which have been passed in the united states that says privacy coins and mixers are illegal and outright banned.

As proof of this, we see there remain mixers and privacy coins operating with a presence inside the USA.

While some have claimed mixers are "obviously illegal" I have yet to see them cite any proof or evidence of this.

[WillyAp]

Privacy coins and mixers are designed and engineered to make transactions which conceal the identity of end users, allowing them to maintain a relative degree of anonymity.

Depends in which country you are living. In theory you can do with your money what you please, Cryptos are not forbidden.

[DaveF]

As WillyAp said a lot is going to depend on where you live.

I'll say this while wearing a sig for a mixer (sorry Royce)

There are other ways of separating ownership of coins (coinjoin / join market).
Some exchanges that have email verification only
P2P markets
And so on.

Mixers / privacy coins just kind of make it easier.
So even if they could stop mixers / privacy coins, witch governments probably can't since they would just reappear elsewhere. There would be other options, and getting all of those would be just about impossible.

-Dave

[Tazzy4050]

Well looking to buy individual privacy coins, ICOs, or mixers? You're not alone. At this point in the crypto boom, there's more crime than ever before. Scammers are preying on innocent investors with the promise of high returns by using all sorts of different tactics to trick people into believing they're getting in on a good deal. In fact, it's estimated that scams like these might cost us as much as $20 billion this year alone!

[SquirrelJulietGarden]

They are not illegal years ago but now governments and their authorities are more considering privacy coins and mixers are illegal. Over time, more money laundering activities on privacy blockchains and mixers so governments pay more attention on it and don't want to lose their control on cash flows in societies.

The easiest way to prevent less people to use those tools is to make it illegal and people use it will be considered as criminals.

[Husires]

I think they start illegally connecting it when it helps illegal services such as sending money to banned countries or hacking money and these mixers do not cooperate with the authorities then they have enough reason to close these services.
As for the service itself, what is the difference between it and the Tor or VPN service, both of which make tracking the average user very difficult, but some of these services share data with the government, and therefore they do not mind making these services continue.

[348Judah]

Privacy coins and mixers are designed and engineered to make transactions which conceal the identity of end users, allowing them to maintain a relative degree of anonymity.

Depends in which country you are living. In theory you can do with your money what you please, Cryptos are not forbidden.

This is not only about the country or location they are sited, it's all about the company in charge of the mixing service, i believe discussions like this has not been popping up not until the issue with chipmixer comes up and many begin to give a second doubt about bitcoin mixing services, well as to those that have been engaging with this service althrough before now, i think nothing to regret about and as I've said, it depends on those in charge.

[rat03gopoh]

The easiest way to prevent less people to use those tools is to make it illegal and people use it will be considered as criminals.

Well, its a cruel conclusion to deprive users of even more rights. If after the mixer, the government still demonstrates their inability to deal with crime, crypto (entity-wise) is the last thing they should consider completely illegal.

[_act_]

They are not illegal years ago but now governments and their authorities are more considering privacy coins and mixers are illegal. Over time, more money laundering activities on privacy blockchains and mixers so governments pay more attention on it and don't want to lose their control on cash flows in societies.

The easiest way to prevent less people to use those tools is to make it illegal and people use it will be considered as criminals.

Did you remember two or three years ago when exchanges in United States were delisting privacy coins like monero, dash and zcash? Though dash and zcash cannot be considered as true privacy coins but they delisted them to the point that the coins decreased very well in price and value. The next thing we heard about was that Asians were buying the privacy coins to have the opportunity to earn more. What happened? Their price went up back.

Who are the government? Know that the world government can not think the same at the same time. If US government are no more supporting privacy coin, that does not mean that many governments in the world make it illegal already.

[AbuBhakar]

Privacy coin and mixers only becomes illegal when it was already used to Money Laundering that is illegal by the law. There’s no one regulating this business on whom can use it which is why it was always subjected to investigation.

A clear example that mixer is not illegal is Chipmixer. It took the government many years before it was taken down because they are just waiting for an evidence that the services is violating the law since they can take down the service immediately if there’s really a law that they can use to do so.

[Kakmakr]

The thing is.... not all people using mixers are using it for criminal activities. I use them to "clean" my coins, because I do not know where it originated from and if it is linked to crime, if I will be implicated. 

The mixers will prevent "anyone" to fire up a browser and then to navigate to a block explorer and to trace everyone back to their hoard. Do you think "everyone" can do that with cash? (So why should it be illegal if you have pseudo anonymity when you use cash?) 

[panganib999]

For me, without the argument of territories and legislations, mixers are as legal as they can be, although yes, there's the possibility that scammers, money-launderers, and thieves may use them to wash dirty money and make them usable after, but as it stands today exchanges are becoming even more smarter, and so are mixers.

There's also the case of people using it for crimes, but I don't believe mixers are the ones that should be persecuted, the perpetrators should be.

I've used mixers in the past to clean my cryptocurrencies and I could tell you right now even though I'd sound like I'm blowing my own trumpet that I am as trustworthy as they go. Does that give the authority grounds to arrest me? I don't think so.

At the end of the day, it's the actions thereof that are illegal, not the means that which enables the crime. If that would be the case then guns should be illegalized, knives should be, and owning wealth more than 99% of the world's population too!

[worldofcoins]

Privacy coins and mixers are designed and engineered to make transactions which conceal the identity of end users, allowing them to maintain a relative degree of anonymity.

Depends in which country you are living. In theory you can do with your money what you please, Cryptos are not forbidden.

Mixers will eventually be tagged for money laundering at some point in the future. No one knows if the mixer is being used to launder the coins or set up a privacy barrier.
At some point, Investigation agencies will come across a mixer with a vast mixing volume, and there's a reasonable assumption that money was laundered through the service. Take the example of Chipmixer. Before, it was not targeted until recently when they've become a good business.

[franky1]

AEC (anonymity enhanced cryptocurrency), mixers, tumbler, hoppers are not par-Se illegal. but in all western countries, financial crime policies treat them as something to go on a watch list/suspect list

most regulated services have a rating system.. a points or percentage rating of each user. rating of suspicion, not just for crimes but also for tax evasion and other things..
(its actually worth a read of regulators guidance to VASPS, its enlightening to learn the traps(playing dumb and not knowing stuff wont help you stay safe))

in short using AEC/mixers will get you flagged and watched far more than just using currency normally. thus you are more likely to be pointed out due to the AEC/mixer usage than via other means.. so if you then do a crime and then try to hide it you are more likely to get spotted because you tried to hide it(the attempt to hide it gets you noticed)

many silly people think things like privacy and fungibility is a yes/no 2 option answer. its not... its a % scale or a points system.. where points dont win rewards. but warrants

just using things like monero, dash, lightning, or services like mixers/tumblers already raises a red flag even before they investigate a crime

you are literally added to a short list or given a % risk/suspect rating by regulated services. and if certain pieces of suspected puzzle pieces come together to a high % of risk then things start to get messy for that person

even if you are innocent of a crime.. being on the receiving end of a mixer/AEC where you are now handling criminally related funds can have your funds seized where the only chance to get it back is for you to come clean and admit all of your utility of your funds to explain your innocence. meaning trying to hide ends up having you being asked more questions just to get funds back..

..
its like taking cash across the border where by just taking $10k across the border is near certain to automatically get it seized and then have to go to court and publicly reveal your life to show innocence to get it back
im not saying its right/good.. but its how the system operates, so learn how the real world works to know how to avoid things.. even if things say they avoid regulated policy, read the policies itself to learn what to avoid

[mendace]

Mixers will eventually be tagged for money laundering at some point in the future. No one knows if the mixer is being used to launder the coins or set up a privacy barrier.
At some point, Investigation agencies will come across a mixer with a vast mixing volume, and there's a reasonable assumption that money was laundered through the service. Take the example of Chipmixer. Before, it was not targeted until recently when they've become a good business.

What I don't understand in using these systems is why continue to use them when we constantly talk about privacy, security, etc. when joinmarket exists, which is certainly better at it.

[puloweh555]

Not all crypto privacy coins and mixers are illegal, but their use may be viewed as illegal depending on the laws in the respective countries. Although the use of privacy coins and privacy mixers is not directly illegal, some countries have tightened regulations against the use of cryptocurrencies to prevent money laundering and other illegal activities. Some countries even specifically prohibit the use of privacy coins and privacy mixers.

Therefore, it is important for cryptocurrency users to understand the laws in their country and do their research before using a privacy coin or privacy mixer.

[Fivestar4everMVP]

First, comparing privacy coins and mixers to an ad blocker seems kind of inappropriate in my personal opinion..

Ad blocker is very common in browsers, and some other types of web applications, there are some app the user pays a small token, to have ads blocked, while for majority of other apps, the user can block ads by just turning a button on or off..

Privacy coins and mixers, as you explained, might not be understood that way by authorities, though currently, there are no laws that have declared privacy coins and mixers as illegal, but authorities in some parts of the world see it as a means through which transactions that are illegal, could be carried out, and this is where the confusion lies.

Authorities will always see anything they have no access to, as a threat.

[hatshepsut93]

many silly people think things like privacy and fungibility is a yes/no 2 option answer. its not... its a % scale or a points system.. where points dont win rewards. but warrants

And how exactly this system works is a secret to prevent people from gaming it. So if you think you can bypass it by splitting your transactions, using proxies, or other methods, chances are you will attract even more attention and will look more suspicious.

When I was withdrawing a large sum of money from crypto exchange, I just took a huge leap of faith, and luckily it all went smoothly. But I was reading reviews and discussions, and other people who use same banks were not so lucky and had their bank account frozen for doing large p2p transfers.

[mv1986]

As WillyAp said a lot is going to depend on where you live.

I'll say this while wearing a sig for a mixer (sorry Royce)

There are other ways of separating ownership of coins (coinjoin / join market).
Some exchanges that have email verification only
P2P markets
And so on.

Mixers / privacy coins just kind of make it easier.
So even if they could stop mixers / privacy coins, witch governments probably can't since they would just reappear elsewhere. There would be other options, and getting all of those would be just about impossible.

-Dave

Stopping mixers is possible but as you said they will show up elsewhere, but stopping Monero, for instance, would require them to crack the algorithm or develop the ability to somehow assign a transaction to a sender and a receiver, which means they would have to identify the true signer of a ring signature, right? Now if it is known that a certain degree of ring signatures can be followed back, couldn't the security just be raised to a level where statistics make it impractical again? I have never looked into the statistics for that, but stopping mixers seems easier to me then stopping Monero. Mixers would always have to rebuild trust or are there decentralized options?

[franky1]

many silly people think things like privacy and fungibility is a yes/no 2 option answer. its not... its a % scale or a points system.. where points dont win rewards. but warrants

And how exactly this system works is a secret to prevent people from gaming it. So if you think you can bypass it by splitting your transactions, using proxies, or other methods, chances are you will attract even more attention and will look more suspicious.

When I was withdrawing a large sum of money from crypto exchange, I just took a huge leap of faith, and luckily it all went smoothly. But I was reading reviews and discussions, and other people who use same banks were not so lucky and had their bank account frozen for doing large p2p transfers.

if you read regulations. a custodian/bank/money service has to allow the funds to move unless they are court ordered to not.., they cant just freeze accounts and steal funds.. the most they can do is allow customer to remove/transer balance and close the account.

emphasis banks/custodial services cannot just steal funds as part of their business policy


so when something is just "suspect" but if it meets a certain suspicion threshold, the money still moves but the service sends a SAR to tax office of financial crimes office(depending on reason) where by if there is criminality then a court order is THEN done to request more information and to freeze account

so account funds are not seized for simply moving money(otherwise rich people would have banking headaches each day they buy a lambo)


now the separate situation you experience/heard:
many of the p2p transfers are not frozen due to amounts. otherwise businesses/rich people will have accounts closed all the time

what is actually found is that scammers wanting coin buy coin via p2p. then they call their bank and say that someone hacked their account and spent their money on something the (scammer) didnt want. and request that the transaction is fraudulent. thus red flagging the bitcoin seller as a fraud/thief.. even though it is the buyer being the scammer. where the scammer gets a fiat refund whilst also keeping the coin

this is a known thing called "chargeback scamming" it went rife in the days of localbitcoins which eventually made localbitcoiner sellers have to do their own due diligence by asking for KYC to prove the buyer at the keyboard was the account holder. to protect the seller.
this then made local bitcoin less popular and now people do it via De-fi to avoid kyc.. which is only at the beginning of people doing chargeback scamming. so expect many sellers to see bank problems when chargeback scamming becomes rife on de-fi

and yes many exchanges got red flagged by banks where even centralised exchanges were getting chargeback scammed. which means other innocent people using same cex had a warning to not use that service..

over the last 9 years banks were not anti-crypto as much as said. it was that the chargeback scamming was so rife that anything associated with crypto services that were victims of those scams became headaches. where some banks just said no rather than handling things
(said no to new business account applications where businesses were 'crypto' based)