Tornado cash and others mixers

[joniboini]

It rather means an environment where the government is less concerned on what happens in the mixers.

Unfortunately, I don't think that will ever happen. The government will always try to control every mixing service for their own purpose, so unless the mixer works together with them I doubt they'll be free from scrutiny.

Going by your suggestion that the mixers should ban money laundering activities in their ToS. Even if they do, it cannot be monitored. I also feel that the mixers are not involved in some of the laundering that happens.

That's true, which is why I doubt it will be effective to begin with. I'm not even sure it will give them enough legal loopholes if they don't filter funds on their own, which brings another issue with potential users leaving them if they do that. There's no perfect solution for this IMO. Worst comes to worst, some mixers can stop their service and relaunch with another name (as long as they don't use the same addresses, etc).

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[zasad@]

It is high time mixers begin to consider economic friendliness before starting operation in a particular zone.

What kind of friendliness are you talking about? A business that focuses on privacy is not going to be popular if they explicitly share data with the government. Maybe they'll do it behind the scene, though I've yet to see one that is safe from a government investigation. Another option is probably explicitly banning money laundering activities on their ToS. Not sure how effective that will be since it doesn't guarantee any immunity, not to mention their potential customer might not use them because of that too.

It seems you misunderstood me or I didn't express myself so well. The friendliness used in this context doesn't mean the mixers being wiling to share all the private data in their custody to the government. It rather means an environment where the government is less concerned on what happens in the mixers.
Going by your suggestion that the mixers should ban money laundering activities in their ToS. Even if they do, it cannot be monitored. I also feel that the mixers are not involved in some of the laundering that happens.

Bitcoin mixers.Interview 06.2020 (EN)
https://bitcointalk.org/index.php?topic=5254652
Look at the answer to question 4 for different mixers. I've seen mixers on this forum that have been shut down by the secret services and it doesn't look like a collaboration.But I have not seen any evidence of cooperation between the misers that we have in this forum with governments.

[Zoomic]

There's no perfect solution for this IMO. Worst comes to worst, some mixers can stop their service and relaunch with another name (as long as they don't use the same addresses, etc).

There is truly no perfect solution. Any mixer leaking the people's information to the government is digging their graves because the people are the customer and it is for the purpose of same privacy the people run to mixers. Why betray them?

Bitcoin mixers.Interview 06.2020 (EN)
https://bitcointalk.org/index.php?topic=5254652
Look at the answer to question 4 for different mixers.

4 question
4. Haters of bitcoin mixers say that "all mixers transmit data to the special services, or they will be closed very quickly." What do you say in response ?

ChipMixer:
"4. If you had power to close any service very quickly, would you start with privacy tools or law breaking services?

MixTum Mixer:
"4. Such things are untestable by an outside observer, but we at [banned mixer] know that at least one exception exists. And, again, we have been running for almost two years. I guess whether this is achievable depends on where your team and your infrastructure is located."

FoxMixer:
"4. The data FoxMixer requires is as minimal as it can be. No accounts, no passwords. We don't even require access - our site can be used entirely via Tor interface. All mixes are deleted after 7 days."

Singling out chipmixer's answer. Is what happened to them as a result of privacy or law breaking services?

[Fiatless]

All mixers work the same way, why are some in the viewfinder and not others? How to know if the holders of such an address have committed illicit activities or not? Can the owner of the mixer know? Is its role to block addresses possible?

Your question is like asking why is the US government attacking only Binance and Coinbase. They can only sue a firm if they have evidence that they committed a crime. SEC is attacking these exchanges now because they have proof that Binance and Coinbase violated the financial laws of the US. Other exchanges might not be clean but the government has not gotten substantial evidence to come for them.

Generally, the US government has been hostile to crypto-related businesses, so this attack on Tornado Cash can be politically or economically motivated. Mixers are giving a worthy service to the crypto community but some criminals can also take advantage of it. After all government officials and others also use the banks to launder illegal funds to tax havens and shell companies.

[zasad@]

There's no perfect solution for this IMO. Worst comes to worst, some mixers can stop their service and relaunch with another name (as long as they don't use the same addresses, etc).

There is truly no perfect solution. Any mixer leaking the people's information to the government is digging their graves because the people are the customer and it is for the purpose of same privacy the people run to mixers. Why betray them?

Bitcoin mixers.Interview 06.2020 (EN)
https://bitcointalk.org/index.php?topic=5254652
Look at the answer to question 4 for different mixers.

4 question
4. Haters of bitcoin mixers say that "all mixers transmit data to the special services, or they will be closed very quickly." What do you say in response ?

ChipMixer:
"4. If you had power to close any service very quickly, would you start with privacy tools or law breaking services?

MixTum Mixer:
"4. Such things are untestable by an outside observer, but we at [banned mixer] know that at least one exception exists. And, again, we have been running for almost two years. I guess whether this is achievable depends on where your team and your infrastructure is located."

FoxMixer:
"4. The data FoxMixer requires is as minimal as it can be. No accounts, no passwords. We don't even require access - our site can be used entirely via Tor interface. All mixes are deleted after 7 days."

Singling out chipmixer's answer. Is what happened to them as a result of privacy or law breaking services?

My opinion about mixers is positive, I use them sometimes, but I have no criminal income and I am not involved in criminal activities, so I do not worry if my transfer data is stolen or given to special services.
__
But the owners of the mixer risk a very large prison term for their activities, so if there is a choice between cooperation with the authorities, then any criminal will cooperate. He doesn't want to go to jail for life.

[joniboini]

Singling out chipmixer's answer. Is what happened to them as a result of privacy or law breaking services?

I'd say the latter. I mean, some news reported that they mix funds from various criminals whether you believe it or not, so the story is quite clear. As far as I'm aware a privacy service itself is allowed, which is why stuff like VPN and so on exist. I remember reading that a mixer is basically a money service business, which is why the government also requires them to comply with KYC and so on. Basically, it is fine to run a mixer as long as the government can see the data while others have difficulties decrypting it. CMIIW.

[Zoomic]

Singling out chipmixer's answer. Is what happened to them as a result of privacy or law breaking services?

I'd say the latter. I mean, some news reported that they mix funds from various criminals whether you believe it or not, so the story is quite clear. As far as I'm aware a privacy service itself is allowed, which is why stuff like VPN and so on exist. I remember reading that a mixer is basically a money service business, which is why the government also requires them to comply with KYC and so on. Basically, it is fine to run a mixer as long as the government can see the data while others have difficulties decrypting it. CMIIW.

I also agree with you that the later was the case with chipmixer which shows that they somehow deviated from their statement years after. I also do not think that what happened to chipmixer was just one particular incident. It seems that they have done it so many times and they have been in the bad book of the government for many years without their knowledge. When the evidences were so glaring,  FBI had to strike.

[zasad@]

Singling out chipmixer's answer. Is what happened to them as a result of privacy or law breaking services?

I'd say the latter. I mean, some news reported that they mix funds from various criminals whether you believe it or not, so the story is quite clear. As far as I'm aware a privacy service itself is allowed, which is why stuff like VPN and so on exist. I remember reading that a mixer is basically a money service business, which is why the government also requires them to comply with KYC and so on. Basically, it is fine to run a mixer as long as the government can see the data while others have difficulties decrypting it. CMIIW.

Mixer with KYC I think that customers will not use it. There is another practice when the mixer cooperates with AML services and before using the mixer, the AML service allows the use or writes that the coins have traces of a crime. But this did not help the BITZLATO exchange.

[joniboini]

I also agree with you that the later was the case with chipmixer which shows that they somehow deviated from their statement years after. I also do not think that what happened to chipmixer was just one particular incident. It seems that they have done it so many times and they have been in the bad book of the government for many years without their knowledge. When the evidences were so glaring,  FBI had to strike.

They will be investigated sooner or later even if they don't mix any coins from hackers etc imo. A nonregistered service in the eye of the government will be classified as suspicious even if the data about them is so scarce. I guess that's just the risk of running a mixing service.

Mixer with KYC I think that customers will not use it. There is another practice when the mixer cooperates with AML services and before using the mixer, the AML service allows the use or writes that the coins have traces of a crime. But this did not help the BITZLATO exchange.

True, a lot of people would not use a mixer that explicitly or found to be working with a government/somebody else that collects their data. They'd probably choose a coinjoin or another mixer asap. I've never heard about Bitlato exchange. How did they work as a mixer if they are an exchange, to begin with? A quick search seems to suggest that the founder basically run an unregistered service and facilitate money laundering practice for blacklisted business etc. CMIIW.

[zasad@]

Mixer with KYC I think that customers will not use it. There is another practice when the mixer cooperates with AML services and before using the mixer, the AML service allows the use or writes that the coins have traces of a crime. But this did not help the BITZLATO exchange.

True, a lot of people would not use a mixer that explicitly or found to be working with a government/somebody else that collects their data. They'd probably choose a coinjoin or another mixer asap. I've never heard about Bitlato exchange. How did they work as a mixer if they are an exchange, to begin with? A quick search seems to suggest that the founder basically run an unregistered service and facilitate money laundering practice for blacklisted business etc. CMIIW.

read the news
https://www.bbc.com/news/business-64322576
__
Bitzlato was not an exchange, it was a large peer-to-peer exchange that had contracts with AML licensed services. But for some reason news sites do not write about this anywhere.
They were not lucky because they are Russians, one founder was arrested in the USA, the second is now in Russia, but it is dangerous for him to leave the country.
AML services do not give any guarantees, they charge a lot of money for services, but in the contract they write that they do not guarantee the result..

[Becassine]

Binance and Bitzlato, a lot of btc passed between the two exchanges. In fact, Binance has not been asking its customers for a KYC for so long. So it was quite easy to get anything through quite easily. There are many articles about this.

Crypto giant Binance processed almost $346 million in bitcoin for the Bitzlato digital currency exchange, whose founder was arrested by U.S. authorities last week for allegedly running a "money laundering engine," blockchain data seen by Reuters show.

https://www.reuters.com/business/finance/binance-moved-346-mln-seized-crypto-exchange-bitzlato-data-show-2023-01-24/

https://www.reuters.com/investigates/special-report/fintech-crypto-binance-dirtymoney/

https://www.amlintelligence.com/2023/06/binance-under-investigation-in-france-for-money-laundering

(...)

If people don't know Bitzlato, there are now a lot of articles about it, and therefore in particular the links with Binance.

But hey, it's really not just in crypto that there is money laundering, it shouldn't represent much compared to the laundering carried out by the banks...

[zasad@]

Binance and Bitzlato, a lot of btc passed between the two exchanges. In fact, Binance has not been asking its customers for a KYC for so long. So it was quite easy to get anything through quite easily. There are many articles about this.

Crypto giant Binance processed almost $346 million in bitcoin for the Bitzlato digital currency exchange, whose founder was arrested by U.S. authorities last week for allegedly running a "money laundering engine," blockchain data seen by Reuters show.

https://www.reuters.com/business/finance/binance-moved-346-mln-seized-crypto-exchange-bitzlato-data-show-2023-01-24/

https://www.reuters.com/investigates/special-report/fintech-crypto-binance-dirtymoney/

https://www.amlintelligence.com/2023/06/binance-under-investigation-in-france-for-money-laundering

(...)

If people don't know Bitzlato, there are now a lot of articles about it, and therefore in particular the links with Binance.

But hey, it's really not just in crypto that there is money laundering, it shouldn't represent much compared to the laundering carried out by the banks...

"During this period, Binance processed transactions totalling at least $2.35 billion stemming from hacks, investment frauds and illegal drug sales, Reuters calculated from an examination of court records, statements by law enforcement and blockchain data, compiled for the news agency by two blockchain analysis firms. Two industry experts reviewed the calculation and agreed with the estimate.

Separately, crypto researcher Chainalysis, hired by U.S. government agencies to track illegal flows, concluded in a 2020 report that Binance received criminal funds totalling $770 million in 2019 alone, more than any other crypto exchange. Binance CEO Changpeng Zhao accused Chainalysis on Twitter of “bad business etiquette.”"
https://www.reuters.com/investigates/special-report/fintech-crypto-binance-dirtymoney/

__
I have said this many times, that any crypto exchange can be blamed for such violations, but this is rarely talked about in the news.

[LeGaulois]

I confirm, Bitzlato wasn't an exchange

Binance CEO Changpeng Zhao accused Chainalysis on Twitter of “bad business etiquette.”"

Do you see how it's funny? Binance is a customer of Chainalysis for years
(as well Gemini, Gov., and many others)

bad business etiquette is always the kind of excuse he likes to uses when it doesn't fit his agenda.
Why still pay a company if they think it has a bad business etiquette? it's like saying that your baker is an asshole but you're still going to buy your bread from him

Their KYC is a joke with compliant specialists who don't do their job correctly, it's well know. So the KYC is easy to bypass.
Before and after KYC, it's not a secret that Binance has been participating directly or not in several money laundering schemes

[teosanru]

Hello,

I've been following the tornado cash case, but I didn't quite understand why this particular mixer was targeted and not all mixers in general. It seems to me that it would make more sense to target none or all of them, no?

I think I'm missing some information to fully understand.

Ps: do you have any information on the dev arrested in the Netherlands?

It is surely not alone. There are a lot of mixers that have come under the radar of different governments around the globe. Even Chipmixer was recently shut allegedly for money laundering and also a few years back bitmixer themselves shut their services of bitcoin mixing. These companies know that governments would never want anonymous transaction and anything making them anonymous will be busted sooner or later.

[Zoomic]

Singling out chipmixer's answer. Is what happened to them as a result of privacy or law breaking services?

I'd say the latter. I mean, some news reported that they mix funds from various criminals whether you believe it or not, so the story is quite clear. As far as I'm aware a privacy service itself is allowed, which is why stuff like VPN and so on exist. I remember reading that a mixer is basically a money service business, which is why the government also requires them to comply with KYC and so on. Basically, it is fine to run a mixer as long as the government can see the data while others have difficulties decrypting it. CMIIW.

Mixer with KYC I think that customers will not use it. There is another practice when the mixer cooperates with AML services and before using the mixer, the AML service allows the use or writes that the coins have traces of a crime. But this did not help the BITZLATO exchange.

Mixer with KYC is a crazy idea that cannot sell. It is just like telling someone to submit their data to you for you to help them hide their data. Just that your data in your hand is not safe, it is only safe in miners hands. Even exchanges are loosing customers because of KYC, let alone mixers.

Avoiding crimes such as laundering with mixers lie in the hands of the mixers to control because if they don't control it, when the government gets involved, it doesn't really go well.

[zasad@]

I confirm, Bitzlato wasn't an exchange

Binance CEO Changpeng Zhao accused Chainalysis on Twitter of “bad business etiquette.”"

Do you see how it's funny? Binance is a customer of Chainalysis for years
(as well Gemini, Gov., and many others)

bad business etiquette is always the kind of excuse he likes to uses when it doesn't fit his agenda.
Why still pay a company if they think it has a bad business etiquette? it's like saying that your baker is an asshole but you're still going to buy your bread from him

Their KYC is a joke with compliant specialists who don't do their job correctly, it's well know. So the KYC is easy to bypass.
Before and after KYC, it's not a secret that Binance has been participating directly or not in several money laundering schemes

Chainalysis and its competitors are always late. After opening a fraudulent scheme or any crime, these services can track the path of money and mark addresses, but most likely the coins will belong to bona fide buyers. And the exchange, unfortunately, may not know that the coins were criminal when they came to the exchange and the AML providers did not respond at that moment.

[joniboini]

Avoiding crimes such as laundering with mixers lie in the hands of the mixers to control because if they don't control it, when the government gets involved, it doesn't really go well.

I guess we can only ask them how they plan to avoid government scrutiny, and if they have a plan to implement a filter or something similar. But then again there is no ideal solution since some customers might get turned off by their rules. There is also a potential for abuse since we can't easily dispute their claims if they decide our funds are "tainted" and unsafe to mix. I guess people should realize that everything is never gonna be safe and plan accordingly or use other tools if they can't find any good mixer for their purpose.

[hugeblack]

Their KYC is a joke with compliant specialists who don't do their job correctly, it's well know. So the KYC is easy to bypass.
Before and after KYC, it's not a secret that Binance has been participating directly or not in several money laundering schemes

CM admin's data was obtained from data he provided to Binance so they are cooperating with the authorities whose preferred option is always Chainalysis. Chainalysis runs Electrum servers, some CoinJoin mixes, collaborates with Wasabi and with some wallets/hardware wallets, explorers, almost impossible for the average user not to have data registered on Chainalysis.

Chainalysis and its competitors are always late. After opening a fraudulent scheme or any crime, these services can track the path of money and mark addresses, but most likely the coins will belong to bona fide buyers. And the exchange, unfortunately, may not know that the coins were criminal when they came to the exchange and the AML providers did not respond at that moment.

I wouldn't be surprised if Chainalysis was running a mixing service, as after CM stopped many competitors appeared who could not verify the quality of the mixing service they provide.

[zasad@]

Avoiding crimes such as laundering with mixers lie in the hands of the mixers to control because if they don't control it, when the government gets involved, it doesn't really go well.

I guess we can only ask them how they plan to avoid government scrutiny, and if they have a plan to implement a filter or something similar. But then again there is no ideal solution since some customers might get turned off by their rules. There is also a potential for abuse since we can't easily dispute their claims if they decide our funds are "tainted" and unsafe to mix. I guess people should realize that everything is never gonna be safe and plan accordingly or use other tools if they can't find any good mixer for their purpose.

What filter are you talking about?
Not one AML provider will work with a mixer, because it will show everyone that these providers have very little efficiency. Then after that, a criminal case will need to be opened against the AML provider And the mixer is not to blame for anything.

[dansus021]

The US government has also accused many crypto exchanges of this crime. Any crime in the blockchain leaves its traces forever, and therefore the blockchain will work against criminals in time, when experts see all the transactions of criminals.

Yes US government keeps coming to sites who related to crypto and then seizing them and freezing their crypto holding at the end of the day they can sell it 

Like the recent news - https://www.coindesk.com/business/2023/07/12/us-government-moves-300m-worth-of-bitcoin-linked-to-silk-road-on-chain-data/
"The U.S. government previously sold 9,861 bitcoin for $216 million in March. Two wallets tagged as belonging to the U.S. government and linked to the Silk Road seizure of crypto have moved over $300 million worth of bitcoin (BTC) in three separate transactions on Wednesday morning, on-chain data shows."