Bitcoin mixing is NOT money laundering, per se

[BlackHatCoiner]

Some clarification is needed to this board due to the recent incident with ChipMixer.

To all advocates of anti-anonymous Bitcoin and Internet tools: Bitcoin mixing is NOT money laundering, per se.

Definition of money laundering:

Money laundering is the process of illegally concealing the origin of money, obtained from illicit activities such as drug trafficking, corruption, embezzlement or gambling, by converting it into a legitimate source. It is a crime in many jurisdictions with varying definitions. It is usually a key operation of organized crime.

Definition of Bitcoin mixing:

A cryptocurrency tumbler or cryptocurrency mixing service[1] is a service that mixes potentially identifiable or "tainted" cryptocurrency funds with others, so as to obscure the trail back to the fund's original source.

Unless you think that every potentially identifiable coin is obtained illegally (which would be false), Bitcoin mixing does not equate with Bitcoin laundering. While it is possible to launder, hereby conceal the origins of money from an illegal activity, it is not a money laundering service, in the same manner that while it is possible to terrorize with the assistance of end-to-end encryption and peer-to-peer protocols, such a messenger is not a terrorism service.

When you mix coins, not only do you just not want from the rest to know your business; you want them to know you want to conceal it. It can be a completely conscious decision from any person; criminal or not. If you don't respect this dignify-respecting technique which strengthens individuals' privacy, say it, but say it right; "I don't want that much privacy". Prepare to receive an infinite amount of deprecation from privacy advocates afterwards, but clear it up.

P.S.: You can't have privacy without money laundering due to the nature of humans-- by the way, the opposite does not necessarily hold true.

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[southerngentuk]

Bitcoin mixing (Bitcoin mixing or Bitcoin tumbling) is a technique used to hide the identity of Bitcoin users. When using Bitcoin, transactions are publicly stored on the blockchain and can be tracked by anyone. The use of Bitcoin mixing helps to mask users' Bitcoin addresses and makes it harder to track transactions. However, the use of Bitcoin mixing can also be used to launder money and the funds are used to fund illegal activities. Therefore, the use of Bitcoin mixing completely depends on the intended use of the user. If used correctly, Bitcoin mixing is not money laundering.

And unfortunately our behavior is at the root of the problem, I find that people love to blame products when it is the user who is responsible for that behavior. What I find funny is that the law enforcement agencies keep pretending that they only see the wrongdoing of these products and blame it.

[_act_]

Money laundering is the process of illegally concealing the origin of money, obtained from illicit activities such as drug trafficking, corruption, embezzlement or gambling, by converting it into a legitimate source. It is a crime in many jurisdictions with varying definitions. It is usually a key operation of organized crime.

This is not part of what we are discussing, but why Wikipedia is referring gambling as an illegal activity? If gambling is not legalized in some countries, that does not mean that many countries do not support gambling. In fact, there are some countries that see bitcoin and other crypto to be illegal, but that does not mean cryptocurrencies are not legal. Most countries support bitcoin and many countries are supporting gambling. Gambling is legal.

A cryptocurrency tumbler or cryptocurrency mixing service[1] is a service that mixes potentially identifiable or "tainted" cryptocurrency funds with others, so as to obscure the trail back to the fund's original source.

That is why some criminals that know about mixers are using it. But the point is that not only criminals are using mixers. Even some people that are using mixers took their bitcoin from a platform that is centralized and mix it before sending it to their wallet. Some people may prefer to use a mixer after dust attack. There also several good reasons people are using mixers. Some people do not just take their privacy to play. Some people do not play with privacy because they see it as a way of having full freedom.

Unless you think that every potentially identifiable coin is illegal (which would be false), Bitcoin mixing does not equate with Bitcoin laundering. While it is possible to launder, hereby conceal the origins of money from an illegal activity, it is not a money laundering service, in the same manner that while it is possible to terrorize with the assistance of end-to-end encryption and peer-to-peer protocols, such a messenger is not a terrorism service.

Mixers are not illegal, even when United States have strict rules that mixers can not abide to, United States has never said that they want to ban all mixers, they do not even have the capability to ban mixers outside United States. I have not read anything like that also from other countries.

This is what they are doing, they look for any illegal mixing and expose the mixer, but no country is going against mixers in any country without valid evidence of illegal mixing.

[Agbe]

Anyone thinking of bitcoin mixing with money laundering is not real citizen of a country. Money laundry is a term used by the economic/financial department of the government. Thank you for making some clarification between the two so that those who are not clear for the two different concepts will understand it well. What Happened to Chipmixer is that the company's owner was involved in money laundering and that was why the company was seized and not the company was involved the money laundering. Money laundry can never be a service but it is an act which carry out by individuals while mixing is a serve render to serve humanity. Therefore, nobody should misconceptualize what happened in Chipmixer to another bitcoin mixing companies.

[BlackHatCoiner]

why Wikipedia is referring gambling as an illegal activity?

I'm pretty sure it means unlicensed gambling.

Mixers are not illegal, even when United States have strict rules that mixers can not abide to

Unfortunately, for centralized mixers at least, you're wrong. In the US, you're prohibited to run a non-regulated money transmitting service; and that's pretty much what a good Bitcoin mixer is. Anonymous and it involves and intermediary who will transmit money. However, that does not apply on every country, and it does not mean decentralized mixing is illegal.

[_act_]

Unfortunately, for centralized mixers at least, you're wrong. In the US, you're prohibited to run a non-regulated money transmitting service; and that's pretty much what a good Bitcoin mixer is. Anonymous and it involves and intermediary who will transmit money. However, that does not apply on every country, and it does not mean decentralized mixing is illegal.

If centralized mixers should follow the Bank Secrecy Act and register as a money transmitter, they have to follow anti-money laundering and know-your-customer compliance. But is that possible? If they follow it, that means they are no more mixers but another thing else.

But I am wondering why mixers are allowed on sites like bitcointalk and no regulatory ban.

Just like I said, gambling is not legalized in all countries in the world. Cryptocurrencies are not legalized in a countries of the world, there are over 10 countries in the world that completely ban cryptocurrencies. Because something is not legal in one country, that does not mean it is illegal in another country.

We can just take it that mixers are not illegal. But if they see it having illegal mixing, there is possibility that it would be taken down.

[dragonvslinux]

Mixers are not illegal, even when United States have strict rules that mixers can not abide to

Unfortunately, for centralized mixers at least, you're wrong. In the US, you're prohibited to run a non-regulated money transmitting service; and that's pretty much what a good Bitcoin mixer is. Anonymous and it involves and intermediary who will transmit money. However, that does not apply on every country, and it does not mean decentralized mixing is illegal.

This is certainly the bottom line. The US (as well as EU) will also define money laundering to be whatever they want it to be, even with the rest of world not quite in agreement. Generally, any unlicensed money transmitting service will be considered money laundering if there is no KYC in place, even if not really any different than going to a shop with "dirty cash" and getting change that's "clean" from a vendor.

[Nwada001]

We can just take it that mixers are not illegal. But if they see it having illegal mixing, there is possibility that it would be taken down.

All countries even those who are crypto friendly are most likely to be against Mixing , those countries who are crypto friendly are largely partners with centralized platforms that's to say they want to know how their citizens make use of crypto currency no privacy protection at all.

So using Mixing service will not allow them achieve their goal and as such they will definitely be against the service which they can't render a direct attack to any mixing platform since they are not registered or licensed by any regulatory authority, all they just want it a reason to attack mixing platform and that reason is to link it to money laundering and if they can validate any proof that a crime was committed using the platform then they have all they need to attack.  

Which is why most people are seeing mixing as money laundering platform because of the Fud the Fed's and others Bitcoin haters are spreading regarding Bitcoin.

A real Bitcoiner will definitely know that mixing primary goal is to protect holders privacy, and has nothing to do with money laundering.

[un_rank]

There are lots of privacy options in bitcoin, such as the use of change address and having multiple addresses linked to one private key. Mixers function to make it difficult or impossible to trace the source of funds, this is way off from what money laundering actually is.
The idea that mixers can conceal the trail of stolen funds exists, but that does not make up the bulk of transactions through them.

When you consider that money laundering is actually done through legitimate businesses, should there also be a campaign to close them down as by the logic of mixers encouraging scams, they are doing so as well.

- Jay -

[Yogee]

Definition of money laundering:

Money laundering is the process of illegally concealing the origin of money,[....]

Let's say the source of your funds are clean but do mixers make the process of concealing the funds' origin legal? I think this remains a grey area up to now. I haven't read any updates on the cases filed against owners of previously seized mixers prior to Chipmixer.

Mixers are not illegal, even when United States have strict rules that mixers can not abide to

Unfortunately, for centralized mixers at least, you're wrong. In the US, you're prohibited to run a non-regulated money transmitting service; and that's pretty much what a good Bitcoin mixer is. Anonymous and it involves and intermediary who will transmit money. However, that does not apply on every country, and it does not mean decentralized mixing is illegal.

This is certainly the bottom line. The US (as well as EU) will also define money laundering to be whatever they want it to be, even with the rest of world not quite in agreement. Generally, any unlicensed money transmitting service will be considered money laundering if there is no KYC in place, even if not really any different than going to a shop with "dirty cash" and getting change that's "clean" from a vendor.

There's that phrase that laws needs to be changed according to the changes in society. That's most likely what's happening with the changing definition and scope of existing laws.

[darkangel11]

There's a lot of contradictory statements coming from governments when it comes to mixing.
They claimed that chipmixer helped to launder "money" but most governments don't count bitcoin or any other cryptocurrencies as money. Their laws don't protect bitcoin theft the way it protects money.

A good example of this is insider trading happening with bitcoin all around the world, recently Binance was accused of doing it. If something like this was done with fiat money or stocks you'd see the agencies coming for you very fast, but since it's crypto they barely care. The only reason they're going after CZ is to make it harder for Americans to buy bitcoin when the banks are in trouble. They think that scaring people away from bitcoin will be beneficial for dying banks and should prevent a bank run.

If bitcoin is not money and you can trade it like you trade gift cards or game tokens, why were people put in jail for money transmitting without a license?

How come some politicians treat it as gift cards or game tokens and others want you to apply for licenses and forbid you to make it hard to trace?

IMO mixers have the right to exist and be used by citizens of a country, especially as long as bitcoin isn't a recognized and accepted currency in that country. If it becomes fully regulated they can make it clear whether it is money and if that money is allowed to be made untraceable by people who want to use it for open, legal, payments in the country.
You either regulate and accept it, or you don't accept it and we do what we want with it just as we play around with game currencies and casino chips.

[Woodie]

Is some way this could be defined to be some kind of money laundering as you conceal the origin of the transaction, the only thing that separates bitcoin mixing and money laundering... pretty much borders around the legal side of the transaction.

But whatever the case, crypto by nature does have the anonymity aspect to it and the origin of the coins matter less and makes it difficult to define money laundering in this context.

[FahriZah]

We Know So Many People’s Interested And Involved With Bitcoin And Crypto Currency Projects Because Just Trying To Build Up In Future Life With Crypto Currency Related Project So Bitcoin Is Not Money Laundering Issue.

[Flexystar]

That was definitely a bad incident with ChipMixer and it should have been handled in a better way by the owners actually. There were many justifications available for the same but unfortunately, the case was appealed strongly by juries. I think they should have clearly mentioned how crypto works and how money (fiat) works. Though there were many grounds such as, virtual currencies not being fiat they are just mixing up a bunch of encrypted data and giving away fresh encrypted and more protected data etc.

I am not sure if such grounds are valid in the court or not but with such a big mixer with that much money they should have hired the best lawyer in the US>

In many countries, it could have been based on protection against the data by adding more security such as mixing and creating anonymous fresh data sets. I don't think it was money laundering at all.

[Ever-young]

In simple terms money laundering is a term giving to all illegal money activities by government.
Why coin mixing is method of hiding coins holders privacy.

Their is probably no relationship between Bitcoin Mixing or any Mixing service and that's of money laundering.

Calling Mixing service money laundering is just another way for government to damage the image of the Mixing service using the recent news of ChipMixer.

We Know So Many People’s Interested And Involved With Bitcoin And Crypto Currency Projects Because Just Trying To Build Up In Future Life With Crypto Currency Related Project So Bitcoin Is Not Money Laundering Issue.

I really don't see any relationship in regard to the ongoing discussion.
Luckily this topic is self moderated.

[m2017]

That was definitely a bad incident with ChipMixer and it should have been handled in a better way by the owners actually. There were many justifications available for the same but unfortunately, the case was appealed strongly by juries. I think they should have clearly mentioned how crypto works and how money (fiat) works. Though there were many grounds such as, virtual currencies not being fiat they are just mixing up a bunch of encrypted data and giving away fresh encrypted and more protected data etc.

Of course, the owners had to get out of this situation in the best way, but it turned out the way it happened.

I am not sure if such grounds are valid in the court or not but with such a big mixer with that much money they should have hired the best lawyer in the US>

Most likely, almost all the money was confiscated. Another point is why the mixer owners didn't prepare for such a scenario and didn't prepare defense in advance. This type of activity undoubtedly had to attract the attention of law enforcement agencies and, of course, first of all they took up the biggest service.

In many countries, it could have been based on protection against the data by adding more security such as mixing and creating anonymous fresh data sets. I don't think it was money laundering at all.

Laundering is just an excuse to sue a chipmixer and arrange a show execution. The precedent has been created and will now hunt for other platforms too.

[BIT-BENDER]

Many would assume that once a person is trying to be private then something is fishy, this has been the stigma placed on Crypto-currency that all of its users are either scammers or launderers.

Mixing is not a Crime until the person engaging in the Crypto-currency mixing is found guilty. Anyone can want to engage the services of a mixer for anonymous reasons and to protect their privacy.

[coolcoinz]

Is some way this could be defined to be some kind of money laundering as you conceal the origin of the transaction, the only thing that separates bitcoin mixing and money laundering... pretty much borders around the legal side of the transaction.

Not really. Concealing is not yet laundering.

Let's say you have money from a legal source but you don't want your spouse or family to know about it. You get a friend to lend you his account, send money there and get him to withdraw money at the ATM and give you cash. All legal, but the money has been mixed.
Making it harder to find the source of money, by moving it through different banks and multiple bank accounts is not a crime, as long as the money wasn't obtained illegally.

But whatever the case, crypto by nature does have the anonymity aspect to it and the origin of the coins matter less and makes it difficult to define money laundering in this context.

It does, as long as you don't use a centralized exchange or a service that sends money to your bank account.
Here's where it becomes interesting and you have to realize 2 things:

1. Mixing crypto is not illegal.
2. Fiat money belongs to the government.

When you exchange crypto to fiat, it's like accepting government's ToS. You agree to use THEIR money and you must obey all laws regarding it. As long as you get crypto, for instance by gambling in a casino, participating in a signature campaigns, giveaways, raffles, you can freely mix it. You cannot be sentenced for using a mixer!

What is illegal then and when can you be taken to court?
It becomes complicated the moment you exchange bitcoin to fiat money. When you do it, you sell your mixed coins that can technically (but don't have to) come from illegal sources, into fiat money, that is supposed to be clean and legal, and doesn't belong to you. This is the important part, a fiat owner is just a user, but the government is in control, unlike with bitcoin where you're the user and the owner. By exchanging (potentially) dirty laundered coins into fiat, in the eyes of the government you're tainting that fiat, THEIR fiat.

[franky1]

it doesnt matter what idiots that promote mixers think that mixers should be

its about what the regulators say and choose to call red flags to actually act upon

so read what those "watchers" are watching.. to learn what to avoid so that you are not being watched

HINT: if authorities are on the watchout for mixers... and then you are using a mixer, expect to be watched

EG
if cops are on the lookout for people in pink hoodies and your wearing a pink hoody. expect to be highlighted as someone to look into and question when seen
and if you learn that cops are on the watch out for someone in a pink hoody. you might want to choose to change your clothes


http://www.fatf-gafi.org/media/fatf/documents/recommendations/Virtual-Assets-Red-Flag-Indicators.pdf

Transactions by a customer involving more than one type of VA, despite
additional transaction fees, and especially those VAs that provide higher
anonymity, such as anonymity-enhanced cryptocurrency (AEC) or privacy
coins.

Moving a VA that operates on a public, transparent blockchain, such as Bitcoin,
to a centralised exchange and then immediately trading it for an AEC or
privacy coin.

VAs transferred to or from wallets that show previous patterns of activity
associated with the use of VASPs that operate mixing or tumbling services or
P2P platforms

Funds deposited or withdrawn from a VA address or wallet with direct and
indirect exposure links to known suspicious sources, including darknet
marketplaces, mixing/tumbling services, questionable gambling sites, illegal
activities (e.g. ransomware) and/or theft reports.

in short.. use a mixer. expect to be watched closer.. use a anonymity enhanced currency expect to be watched closer

pretending using a mixer/aec hides you better is the opposite of what happens. it reveals you and highlights you better.. not hide

[hZti]

In my opinion Bitcoin Mixing has nothing to do with money laundering, since bitcoins are fungible. Can somebody here see if there are already cases where there was an investigation opened against somebody who has run an Mixing service or somebody who used a mixer?