Bitcoin mixing is NOT money laundering, per se

[bbc.reporter]

Be careful on using a mixer then sending coins to a centralized exchange or a gambling site where you have KYC.

Wrong message.

What we should be saying is "Be careful using centralized exchanges", or better yet "Never complete KYC anywhere." Mixing is not the problem. Coinjoins are not the problem. If anything, knowing how draconian the government is being with trying to surveil you and your coins, you should be mixing and coinjoining more, not less. Stay private, and stop using services which sell out your privacy at the drop of a hat and work in cahoots with your government to surveil, monitor, and control you.

You are either free, or you comply. You can't be both.

You are correct. I only wanted to tell everyone to be careful, however. Let me rephrase and let me share the announcement from Fincen.

Based on a recent report, this could affect more than 300 million users of unhosted CVC wallets insofar as a user’s personal information may be reported if their wallet is deemed by a covered financial institution to be involved in a covered transaction. Because there is no restriction on the number of wallets an individual may have, this number may overestimate the number of unique individuals whose personal information may be required.

Source https://www.fincen.gov/sites/default/files/federal_register_notices/2023-10-19/FinCEN_311MixingNPRM_FINAL.pdf

@everyone. Based on this and if anyone has already used a mixer or DeFi with a certain wallet, be careful on using the wallet for centralized exchanges or gambling sites where you have KYC accounts if these new rules are implemented.

[o_e_l_e_o]

If there was really nothing suspicious about the service mentioned in OP, government must not have taken action against them.

Lol. You think the government only take action against things which are illegal? The government works exclusively for themselves, and will take action against anyone or anything which threatens them, illegal or not. They'll take action against someone who did nothing except write open source code under the guise of tErRoRiSm, but they will ignore fiat banks laundering literally hundreds of billions of dollars for actual terrorist organizations.

It is true that Bitcoin mixing is not money laundering, but it can be a tool or instrument to use in money laundering.

And the internet is a tool or instrument in money laundering, and fraud, and terrorism, and lots more. Should be ban the internet as well?

[franky1]

If there was really nothing suspicious about the service mentioned in OP, government must not have taken action against them.

Lol. You think the government only take action against things which are illegal? The government works exclusively for themselves, and will take action against anyone or anything which threatens them, illegal or not. They'll take action against someone who did nothing except write open source code under the guise of tErRoRiSm, but they will ignore fiat banks laundering literally hundreds of billions of dollars for actual terrorist organizations.

the reason the mixer dev (as you want to pretend its all he was) was in legal dispute not simply for "just writing code" it was that he was financially benefitting from the proceeds of crime because he received funds from criminals that used his code.
also he offered a service and he took a fee per transaction, which made him a MSB/MTS, which comes with regulations.. it really does and should benefit you if you read regulations and court documents, instead of misinformed bias blog posts..

if you want to offer a service and publicise it to customers/clients. you are running a business
if you are running a business, you need to be business savvi to limit your exposure to customer liabilities and laws
if you want to offer a service but not be defined as a operating a business. you need to be extra savvi to operate in such a way that does not meet the definitions of such business

and banks do get penalised. its just the maximum penalty is:
for a bank: just X days fees 0.x% of liquidity
for an individual: more then they can ever afford to pay the court fine

also individuals do not set themselves up as legit businesses to shift the liability away from the operator. so by operatng a business but not doing o officially is a double hit personally

which is why individuals operating as MSB/MTS get hit harder because they are personally made responsible rather than the debt/claim/penalty/charge being pushed to the 'business'

[HmmMAA]

Lol. You think the government only take action against things which are illegal? The government works exclusively for themselves, and will take action against anyone or anything which threatens them, illegal or not. They'll take action against someone who did nothing except write open source code under the guise of tErRoRiSm, but they will ignore fiat banks laundering literally hundreds of billions of dollars for actual terrorist organizations.

That's exactly the part you fail to understand . Banks do that because there's not a public ledger that they're working on . Bitcoin was built exactly to eliminate that kind of operation . So that anyone can audit and make such behaviors extinct . To make even governments accountable based on evidence , not only banks . Guys like you are trying to create a new ( similar to old , but even more complex for audits ) banking system that gives everyone the opportunity to do what big/bad entities were able to do so far . You don't want a better outcome for the whole , but a better outcome for yourself even if that comes against the interests of the whole , because "privacy" . While we should be here discussing how to better protect our privacy - for example ZK proof for KYC/AML - we are wasting time on how bad governments are . If governments are bad let's make something that can make them better , and not us to become worse than them .  
Bitcoin can't be compared with banks , it can be compared with cash  . Bitcoin is a traceable electronic cash system . It was built to take away the worst part of traditional cash which is anonymity . You fail to distinguish the differences between anonymity and pseudonymity and why anonymity can lead to bad results as there are no consequences .    

[cryptosize]

Lol. You think the government only take action against things which are illegal? The government works exclusively for themselves, and will take action against anyone or anything which threatens them, illegal or not. They'll take action against someone who did nothing except write open source code under the guise of tErRoRiSm, but they will ignore fiat banks laundering literally hundreds of billions of dollars for actual terrorist organizations.

That's exactly the part you fail to understand . Banks do that because there's not a public ledger that they're working on . Bitcoin was built exactly to eliminate that kind of operation . So that anyone can audit and make such behaviors extinct . To make even governments accountable based on evidence , not only banks . Guys like you are trying to create a new ( similar to old , but even more complex for audits ) banking system that gives everyone the opportunity to do what big/bad entities were able to do so far . You don't want a better outcome for the whole , but a better outcome for yourself even if that comes against the interests of the whole , because "privacy" . While we should be here discussing how to better protect our privacy - for example ZK proof for KYC/AML - we are wasting time on how bad governments are . If governments are bad let's make something that can make them better , and not us to become worse than them .  
Bitcoin can't be compared with banks , it can be compared with cash  . Bitcoin is a traceable electronic cash system . It was built to take away the worst part of traditional cash which is anonymity . You fail to distinguish the differences between anonymity and pseudonymity and why anonymity can lead to bad results as there are no consequences .    

Proof (Satoshi quote) or it didn't happen.

[Z-tight]

If there was really nothing suspicious about the service mentioned in OP, government must not have taken action against them. When something gets out of hand, then it becomes necessary for government to take action and this is what happened in case of chipmixer.

The government can pick any reason out of a hat to seize and stop privacy solutions and that is because the government stands against privacy. You must understand that money laundering and illicit activities are mostly perpetrated by centralized services and their institutions and not so much with BTC or BTC privacy solutions. But they want you to believe their lies, and the more people believe in the lies that they tell, then they wouldn't want to use privacy solutions nor protect their privacy, since they could be accused of crime if they do so.

It is true that Bitcoin mixing is not money laundering, but it can be a tool or instrument to use in money laundering.

Guns are tools that the police use in stopping criminals and protect citizens, but the bad guys also use guns to rob, kill and take hostage, do we then ban guns?

[BlackHatCoiner]

@everyone. Based on this and if anyone has already used a mixer or DeFi with a certain wallet, be careful on using the wallet for centralized exchanges or gambling sites where you have KYC accounts if these new rules are implemented.

If you're living in the US and this bills passes, you should absolutely forget about centralized exchanges, as you may be accused of funding terrorism because of potentially bad coin history. Unless you buy and store all your bitcoin there, which would nullify Bitcoin as concept in the first place, and you shouldn't do it.

Proof (Satoshi quote) or it didn't happen.

It didn't happen, usual nonsense again. There are lots of posts from Satoshi in which he talks about Bitcoin in terms of privacy, none of which he claims it's built to take away anonymity. Hell, he was even talking about "blinding keys" and "group signatures", techniques which are very similar to ring signatures and stealth addresses used by XMR: https://bitcointalk.org/index.php?topic=770.msg9074#msg9074.

[NotATether]

there are many ways to remove taint without doing the things listed in regulations. that are not "mixers". find them, create them, use them

That's baloney. The only way to remove "taint" (which is just an imaginary concept which was invented by blockchain analysis companies who sell their services to exchanges) is by making a series of transactions with a bunch of other people's outputs so that nobody is able to figure out what belongs to who.

In other words, a coinjoin, or a mixer - which is just a very large and continuous coinjoin by definition.

[franky1]

there are many ways to remove taint without doing the things listed in regulations. that are not "mixers". find them, create them, use them

That's baloney. The only way to remove "taint" (which is just an imaginary concept which was invented by blockchain analysis companies who sell their services to exchanges) is by making a series of transactions with a bunch of other people's outputs so that nobody is able to figure out what belongs to who.

In other words, a coinjoin, or a mixer - which is just a very large and continuous coinjoin by definition.

think harder

learn how regulators define mixers/coinjoin.. then think of practices not within those definitions
EG fiat example
a retailer receives funds. and pays out funds. they are not defined as a MSB/MTS nor mixer

however offering a service that wants to describe itself as a mixer then pigeon holes itself into the category.

think harder.. think about something not described/advertised/promoted as a mixer but allows money flows without MSB/MTS regulation

oh and "taint" is a bitcoin term created far before chainanalysis was even a thing..

[Medusah]

While we should be here discussing how to better protect our privacy - for example ZK proof for KYC/AML - we are wasting time on how bad governments are

Do you even know what ZK and KYC mean?  It is zero knowledge and know your customer.  How can you provide a proof that you know your customer if you have zero knowledge about him?

a retailer receives funds. and pays out funds. they are not defined as a MSB/MTS nor mixer

In FinCEN proposal it says that you can only use bitcoin through centralized exchanges that require KYC.  Their definition of "CVC mixing" is totally broad: https://fincen.gov/sites/default/files/federal_register_notices/2023-10-19/FinCEN_311MixingNPRM_FINAL.pdf, page 30.

The term “CVC mixing” means the facilitation of CVC transactions in a manner that obfuscates the source, destination, or amount involved in one or more transactions, regardless of the type of protocol or service used.

[franky1]

a retailer receives funds. and pays out funds. they are not defined as a MSB/MTS nor mixer

In FinCEN proposal it says that you can only use bitcoin through centralized exchanges that require KYC.  Their definition of "CVC mixing" is totally broad: https://fincen.gov/sites/default/files/federal_register_notices/2023-10-19/FinCEN_311MixingNPRM_FINAL.pdf, page 30.

The term “CVC mixing” means the facilitation of CVC transactions in a manner that obfuscates the source, destination, or amount involved in one or more transactions, regardless of the type of protocol or service used.

read more and have a deeper think about it
you can use funds in many ways.

it actually says if a service is defined as a CEX then it needs to be regulated.. it does not say all services need to be defined as a CEX
learn about other services not defined as a CEX.

as for mixer if you are advertising the purpose of the service is to anonymise, obfuscate, distort the lineage of the funds. they you as the advertiser are putting your service into the "mixer" category

again learn about other services not defined as a mixer

learn what the definitions do say then think about what it is not saying. and think about things in the not said category

[Medusah]

it actually says if a service is defined as a CEX then it needs to be regulated.. it does not say all services need to be defined as a CEX

If a store accepts bitcoin and does not keep them in a regulated exchange, it can be considered "obfuscation of destination".  If you swap bitcoin for an altcoin and then the altcoin for bitcoin, it can be considered "obfuscation of destination".  If you move your bitcoin across your wallets, it can be considered "obfuscation of destination".  Anything can be considered to obfuscate unless you report all of your transactions to the government or do everything inside a regulated CEX.

[franky1]

it actually says if a service is defined as a CEX then it needs to be regulated.. it does not say all services need to be defined as a CEX

If a store accepts bitcoin and does not keep them in a regulated exchange, it can be considered "obfuscation of destination".  If you swap bitcoin for an altcoin and then the altcoin for bitcoin, it can be considered "obfuscation of destination".  If you move your bitcoin across your wallets, it can be considered "obfuscation of destination".  Anything can be considered to obfuscate unless you report all of your transactions to the government or do everything inside a regulated CEX.

read it properly.. stop making up things

[jeha2015]

Actually having a bitcoin mixer is good, so it's more private, especially since government regulations usually only impose taxes on crypto holders. Maybe it's small at the moment, but did you know, crypto is increasingly being considered a commodity that has a lot of interest, so taxes could be increased again. For people who work hard and want their money to be safe, mixing Bitcoin could be the solution.

The purpose of all this mixing is to maintain privacy, so why is it a problem when it comes to money laundering? What I am looking for as a commoner is decentralization, why are they accused of being negative, do they want to return to conventional as they want.

[HmmMAA]

Do you even know what ZK and KYC mean?  It is zero knowledge and know your customer.  How can you provide a proof that you know your customer if you have zero knowledge about him?

I think i know and i will give you an example . Let's say i want to subscribe into one exchange . Currently i have to send them my national identity or passport , proof of address , phone bill etc . With ZKP i can prove that i'm a citizen of a non banned country but they will never know from which country i am , that i live in my city without showing them my specific address and that i own a telephone number from a company based in the country i live and not an anonymous sim card . In other words i don't have to prove in detail all of my personal info but just prove that i'm eligible to be registered in that exchange .
Seems that you have a misunderstanding of what ZKP's can provide . A video that might help is https://youtu.be/D4iUeVbib_k?t=1141 , i'd suggest to watch it all . Another one close to eli5 is https://www.youtube.com/watch?v=V_ZWNFUHlRQ . Of course , i could provide videos in more detail but these are considered "anathema" here and i won't .

  

[Twentyonepaylots]

If there was really nothing suspicious about the service mentioned in OP, government must not have taken action against them.

Lol. You think the government only take action against things which are illegal? The government works exclusively for themselves, and will take action against anyone or anything which threatens them, illegal or not. They'll take action against someone who did nothing except write open source code under the guise of tErRoRiSm, but they will ignore fiat banks laundering literally hundreds of billions of dollars for actual terrorist organizations.

I believe so. They are called government to govern its people and territory, so technically they are not only against to illegal activities but also to something that possesses a threat for their government this includes decentralization like cryptocurrencies. Government knows the darkest side of the story of their country and won't even give a bulge about it.

It is true that Bitcoin mixing is not money laundering, but it can be a tool or instrument to use in money laundering.

And the internet is a tool or instrument in money laundering, and fraud, and terrorism, and lots more. Should be ban the internet as well?

Good analogy, not every mixing is laundering. I agree it is used in money laundering but that doesn't mean it is illegal. Same as guns as well, you can kill someone with it or you can save someone using it.

[Abiky]

If there was really nothing suspicious about the service mentioned in OP, government must not have taken action against them. When something gets out of hand, then it becomes necessary for government to take action and this is what happened in case of chipmixer.

Everything is always "out of hand" when it involves crypto mixers. After all, governments don't want people to enjoy financial privacy. Now the US Treasury wants to target crypto mixers with the excuse that terrorists will be using them for money laundering. You can read all about it here: https://www.wired.com/story/us-treasury-crypto-mixer-hamas/.

Isn't Fiat more attractive than Bitcoin for criminal activities? You can see there are other intentions besides preventing criminals from using a crypto mixer. With heavy pressure from the government, it's likely centralized mixing services will cease to exist in the future. At least, we won't be left "empty handed". Non-custodial (decentralized) mixers will ensure people get the privacy they deserve without fear of censorship or prosecution. As long as developers stay anonymous, no government will be able to stop people from using these services . I wouldn't be surprised if governments decide to hunt privacy coins next. Who knows if someday it becomes "illegal" to use a privacy-oriented cryptocurrency?

[franky1]

Isn't Fiat more attractive than Bitcoin for criminal activities? You can see there are other intentions besides preventing criminals from using a crypto mixer. With heavy pressure from the government, it's likely centralized mixing services will cease to exist in the future. At least, we won't be left "empty handed". Non-custodial (decentralized) mixers will ensure people get the privacy they deserve without fear of censorship or prosecution. As long as developers stay anonymous, no government will be able to stop people from using these services . I wouldn't be surprised if governments decide to hunt privacy coins next. Who knows if someday it becomes "illegal" to use a privacy-oriented cryptocurrency?

currency regulations about money service businesses are not new.  but governments were slow at understanding bitcoin to know whats a money service business.. and.. people wanting to run money service businesses are slow to realise their service is one

but here is where people need to learn.. by reading regulations. what makes them defined as a MSB and then tailor/customise their service to not be a MSB

if you are literally advertising a service that says its function is to take money in, and for a fee process it and hand it back out.. its obviously not advertising itself as a retailer/merchant. nor a taxi cab loyalty point system.. but advertising its a MSB

so these businesses that want to operate without MSB regulations (while resulting in experience of MSB) need to think smarter.
bitcoin has been known to be a currency and fit in the currency jurisdiction for 10 years. so while still defined as currency in law makers definitions, means businesses have to see if their business fits the currency service business.. or is instead a retailer/merchant/auction/property manager

if bitcoin remained as private property decade ago to now. we would not have to think that hard, as governments wouldnt have a fingers worth of power to point at us

[bct_ail]

This is not good, although it's still a proposal and will be submitted in the next two days, there's a chance they might accept it.

What is the current status? Was the proposal been accepted?

[o_e_l_e_o]

What is the current status? Was the proposal been accepted?

It is still open for comment for another 77 days. There are currently 109 publicly posted comments which you can view here: https://www.regulations.gov/document/FINCEN-2023-0016-0001/comment. They are unanimously in opposition to this proposed piece of legislation, although I fully expect the government to completely ignore all these comments and opposition. They've never let the interests of the people stand in the way of their tyranny before.