Mixer restrictions

[nutildah]

A mixer that freezes funds is pointless (otherwise why don't we just use exchanges), but you can beam the money back to the sender and log the IP address (yeah, sorry no-logs crowd) and request headers, in case anyone demands for information and you can just tell them you refused to process the money.

This sounds like a fairly reasonable approach. Leave it to the government to find a way to make it not worth doing...

[LoyceV]

I think though, that the best solution would be for mixers to limit the maximum size of mixes to way below the 50 BTC threshold. It should be like 1 BTC max, and force a minimum waiting period for addresses in between mixes so that the people who run the mixers can check the news and see whether a lot of subsequent mixes from the same address are coming, and if the address has been associated by ZachXBT or some other blockchain analysis as part of a hack or scam or something, to just blacklist the address from the mixer.

That would take away the last bit of fungibility Bitcoin has.

[NotATether]

This sounds like a fairly reasonable approach. Leave it to the government to find a way to make it not worth doing...

I was about to write a detailed explanation on this on AltWTFcoinstalks, but their cloudflare system destroyed my post after I clicked the "Post" button.  

So a theoretical implementation will have to wait....

That would take away the last bit of fungibility Bitcoin has.

1 BTC limits don't really affect fungibility to be honest. And "private" exchanges are already refusing to exchange sanctioned coins and sending them back to the original address.

Blind signatures + coinjoin or whatever combination of algorithms you use will maintain the fungibility for the non-designated addresses <-- it's important to remember that we did not mark the addresses that way, other people did.

[igebotz]

No more billion-dollar mixes. Only hackers mix that much money.

Isn't hackers their target audience? How many none hackers uses mixers nowadays? Curiosity made me ask 

[ABCbits]

--snip--

Its not illegal IF they are registered with FinCEN as a money transmitter businesses... it says it later in the same paragraph you quoted. I'm guessing some of the conditions of operation include freezing funds at the government's request and giving them any/all information about its users, at any time and for any reason. I dunno if there's a demand for such a thing, or if they even exist (outside of licensed  exchanges or swapping services).

For such case, people could just continue to use legally registered exchange. Assuming the exchange doesn't leak/sell your data, simple/naive blockchain analysis unable to track you. But i wonder if this report make current cryptocurrency company bold enough to introduce legal mixer/privacy service.

[LoyceV]

But i wonder if this report make current cryptocurrency company bold enough to introduce legal mixer/privacy service.

If there's money to be made, someone's going to do it. If they KYC all customers, they would even be allowed to advertise their "mixer" on Bitcointalk. But the business model will be so terrible, nobody will use it.

[NotATether]

For such case, people could just continue to use legally registered exchange. Assuming the exchange doesn't leak/sell your data, simple/naive blockchain analysis unable to track you. But i wonder if this report make current cryptocurrency company bold enough to introduce legal mixer/privacy service.

Exchanges' compliance departments feel like they are almost as malicious as the hackers themselves sometimes.

[JayJuanGee]

New report from the United States Department of the Treasury.

Just want to say, in case it wasn't obvious yet, that using mixers is not illegal:

Didn't expect the government to publish that!

I think though, that the best solution would be for mixers to limit the maximum size of mixes to way below the 50 BTC threshold. It should be like 1 BTC max, and force a minimum waiting period for addresses in between mixes so that the people who run the mixers can check the news and see whether a lot of subsequent mixes from the same address are coming, and if the address has been associated by ZachXBT or some other blockchain analysis as part of a hack or scam or something, to just blacklist the address from the mixer.

Blacklisted addresses and transactions that exceed the maximum size are simply beamed back to the sender.

This way a user can stay compliant, and the operational risk of running a mixer is severely reduced.

No more billion-dollar mixes. Only hackers mix that much money.

Its not illegal IF they are registered with FinCEN as a money transmitter businesses... it says it later in the same paragraph you quoted. I'm guessing some of the conditions of operation include freezing funds at the government's request and giving them any/all information about its users, at any time and for any reason. I dunno if there's a demand for such a thing, or if they even exist (outside of licensed  exchanges or swapping services).

A mixer that freezes funds is pointless (otherwise why don't we just use exchanges), but you can beam the money back to the sender and log the IP address (yeah, sorry no-logs crowd) and request headers, in case anyone demands for information and you can just tell them you refused to process the money.

It sounds to me that if you are some government or bank associated criminal then you won't get harassed to mix coins, but if you happen to be a random and/or normal person who wants to process coins (to clean them or whatver), you are going to be harassed into not using mixing services, and if you get your coins back then you are more lucky than if your coins end up getting frozen.

[Odohu]

No more billion-dollar mixes. Only hackers mix that much money.

Isn't hackers their target audience? How many none hackers uses mixers nowadays? Curiosity made me ask 

There are many reason a person can use mixer and it is completely wrong to assume that it is only hackers that use mixers. Such thinking also agree with the authorities that only criminals use mixers or that mixers are bad and used for criminal activities. Mixers simply preserve the essence of Bitcoin which is privacy and in some cases anonymity. In one of the post in our local board, I had the below opinion about Bitcoin for long time holding.

Honestly I learnt about Bitcoin not being private and anonymous long after I have used Bitcoin for years. Earlier on I thought Bitcoin completely shield one from the authorities but developments in Bitcoin and my presence in this forum have opened my eyes to know better. Depending on many reasons, it is better to preserve the privacy of your Bitcoin which is exactly what it was designed for, to do this, you can pass every large quantity you are holding through a mixer to ensure there will be no issue for you in the future.

[Jaweria parveen]

There are many reason a person can use mixer and it is completely wrong to assume that it is only hackers that use mixers. Such thinking also agree with the authorities that only criminals use mixers or that mixers are bad and used for criminal activities. Mixers simply preserve the essence of Bitcoin which is privacy and in some cases anonymity. In one of the post in our local board, I had the below opinion about Bitcoin for long time holding.

As far as I know mixers are very useful for us and we have seen many mixers that hold our Bitcoin for a long time. Although it is not used on our Bitcointalk, we think that they will cheat us, but this is not the case at all. Mixers also have scams, although their team is not able to save their mixer very tightly and hackers can easily phishing it and therefore we are not able to use mixers most of the time. If we have a good mixer that can hold our Bitcoin and other coins, then we can use this mixer. Although there are many ways to hold Bitcoin, if we have a mixer that is clear and complete, then it will be better for us to hold our Bitcoin in a mixer. Although whenever I buy Bitcoin, I would definitely like to keep them in a good mixer.

[rat03gopoh]

I think I'm getting early signals that the government is gonna create a global mixing facility because they need more liquidity for geopolitical matters?

It sounds to me that if you are some government or bank associated criminal then you won't get harassed to mix coins, but if you happen to be a random and/or normal person who wants to process coins (to clean them or whatver), you are going to be harassed into not using mixing services, and if you get your coins back then you are more lucky than if your coins end up getting frozen.

If you want to get the most advanced coin cleaning (legally), let them freeze it. hahaa

The government is the most legal way to clean dirty coins through confiscation/freezing of funds. No external mixer is needed.
And that will keep you permanently clean, as its redistribution requires identity disclosure.

[PrivacyG]

New report from the United States Department of the Treasury.

Just want to say, in case it wasn't obvious yet, that using mixers is not illegal:

Lawful users of digital assets may leverage mixers to enable financial privacy when transacting
through public blockchains.

For instance, individuals may use mixers to protect sensitive
information on personal wealth, business payments, or charitable donations from appearing on a
public blockchain.

https://home.treasury.gov/system/files/246/GENIUS-Act-Illicit-Finance-Innovation-Congressional-Report-March-2026.pdf

This is VERY surprising.  How much should I hope that Mixers will finally be back as in not Censored on Bitcoin Talk any more and people stop talking about them as some tool of crime?

-----

A mixer that freezes funds is pointless (otherwise why don't we just use exchanges), but you can beam the money back to the sender and log the IP address (yeah, sorry no-logs crowd) and request headers, in case anyone demands for information and you can just tell them you refused to process the money.

Why log the IP Address?  Here is my take.  If SOME of the Transactions are beamed back or what ever, it makes no sense to even have the Mixer.  Say there are 5 Mixers and a particular Government decides to Censor me.  And do not tell me there are no ways they could do that.  I would have no way of using Mixers to gain financial Privacy if I wanted, only because a Third Party decided so.

It is equal to the Wasabi 'Black list' that I was against.  The point of Bitcoin was that every body is equal, whether you are from The United States or from the poorest country in the World.  If I am not treated equal to the rest of the users and I may have no right to Privacy because a Third Party said so, what is the difference between this and running my Money through a Bank.

[Lucius]

Isn't hackers their target audience? How many none hackers uses mixers nowadays? Curiosity made me ask 

Those who have the most reasons to hide something are their biggest clients, it's always been that way. I've already written that most of today's mixers come from a single service that provides them with the necessary infrastructure, but also that most have completely equal fees, which in my opinion are excessive.

Today, an average mix costs 70 000 sats + 3-5% of the total amount, and few people are willing to pay that. However, it should be said that there are mixers that offer a test free mix in the amount of 0.001 BTC, and that there is at least one that has reasonable fees.

[NotATether]

Why log the IP Address?  Here is my take.  If SOME of the Transactions are beamed back or what ever, it makes no sense to even have the Mixer.  Say there are 5 Mixers and a particular Government decides to Censor me.  And do not tell me there are no ways they could do that.  I would have no way of using Mixers to gain financial Privacy if I wanted, only because a Third Party decided so.

It is equal to the Wasabi 'Black list' that I was against.  The point of Bitcoin was that every body is equal, whether you are from The United States or from the poorest country in the World.  If I am not treated equal to the rest of the users and I may have no right to Privacy because a Third Party said so, what is the difference between this and running my Money through a Bank.

I guess it was a good thing my post was lost in bits then, as it was going to be even more controversial.

Thing is, I think in this setup, logs are optional. I think a mixer might be able to get away with "boomerang refunds" and low caps/delayed mixing times as long as they demonstrate that they have not processed a large amount of some publicly known hacker's money.

Feds know when a mixer is taking in very toxic coins - investigators from crypto tip them off. So if you're never in the radar then you avoid legal problems.

[nutildah]

For such case, people could just continue to use legally registered exchange. Assuming the exchange doesn't leak/sell your data, simple/naive blockchain analysis unable to track you. But i wonder if this report make current cryptocurrency company bold enough to introduce legal mixer/privacy service.

Licensed casinos can be good for this as well: breaking links between coins. Only they (and the NSA lol) know when someone deposited $1000 in XMR and cashed out $950 in ETH.

I've been using Arkham Intelligence more often recently and it is pretty amazing the level of detail that goes into their "entity" labeling system. I think a lot of the major casinos are labeled these days.

After the fact, it is quite often easy to label mixer addresses as well. Here is 33 BTC labeled "ChipMixer":

https://intel.arkm.com/explorer/entity/chipmixer

Wonder if this belongs to the operator, operator + customers, or what.

[joker_josue]

For such case, people could just continue to use legally registered exchange. Assuming the exchange doesn't leak/sell your data, simple/naive blockchain analysis unable to track you. But i wonder if this report make current cryptocurrency company bold enough to introduce legal mixer/privacy service.

Licensed casinos can be good for this as well: breaking links between coins. Only they (and the NSA lol) know when someone deposited $1000 in XMR and cashed out $950 in ETH.

I've been using Arkham Intelligence more often recently and it is pretty amazing the level of detail that goes into their "entity" labeling system. I think a lot of the major casinos are labeled these days.

After the fact, it is quite often easy to label mixer addresses as well. Here is 33 BTC labeled "ChipMixer":

https://intel.arkm.com/explorer/entity/chipmixer

Wonder if this belongs to the operator, operator + customers, or what.

They have an incredible level of detail. Even so, it's often unclear whether all that detail truly belongs to the entity they claim it to be.

The example is ChipMixer. If the authorities seized the ChipMixer wallets at the end of 2023, how come dozens of ChipMixer wallet movements have occurred in the last 2 years?
Movements that don't end up in the wallets of authorities.
Actually, looking at it, it almost seems like the ChipMixer service is still working.

But I'm not an analyst, and the authorities may not have confiscated all of their addresses.
Now, looking at other similar cases, after the seizures the movements stop. In this case, however, even though there are few, they happen very sporadically.

[d5000]

Its not illegal IF they are registered with FinCEN as a money transmitter businesses... it says it later in the same paragraph you quoted.

Only if they are custodial (full quote "digital asset services that take custody of user funds and accept and transmit value"):.This means basically that Samourai-type CoinJoin style mixers without real custody of funds should not be covered, at least in this part of the document (I searched for the term "CoinJoin", but it's not used in the document).

I think though, that the best solution would be for mixers to limit the maximum size of mixes to way below the 50 BTC threshold. It should be like 1 BTC max, and force a minimum waiting period for addresses in between mixes so that the people who run the mixers can check the news and see whether a lot of subsequent mixes from the same address are coming, and if the address has been associated by ZachXBT or some other blockchain analysis as part of a hack or scam or something, to just blacklist the address from the mixer.

Blacklisted addresses and transactions that exceed the maximum size are simply beamed back to the sender.

I agree with that and I would indeed likely use such a service if it's trustworthy. I wrote some thoughts about possible strategies to prevent abuses and also to prevent funds being freezed due to unawareness of their connection to a hack some months ago in this thread "An ethical mixer / swap protocol - private but not helping crime".

One addition to your proposal is that a person wanting to mix e.g. 100 BTC, would probably then send 1 BTC to the mixer, and the rest of the UTXO funds would be sent to a change address. So the mixer would have to track back the coins some "steps" if the address is used in some parent transaction, otherwise the limitation wouldn't work (I think I wrote something about that in my thread).

Of course there's the incentive question: if criminals or people with "something to hide" are indeed the mixer's target, then its difficult that they'll implement such a protocol. But I think there is definitely a niche big enough for a handful of players who operate with such a "privacy friendly but criminals unfriendly" approach. Wealthy Bitcoin owners (like the use case mentioned in the US congress paper) and early Bitcoin adopters would be a primary target for them.

In reality I don't know why I got such negative feedback in the thread - basically what I was searching for is a mixing service which operates very much like the vast majority of the swap exchanges which are listed in kycnot.me and on similar sites, only that they could return the same coin.

[dkbit98]

Just want to say, in case it wasn't obvious yet, that using mixers is not illegal

It's not illegal unless they are not running or not controlling the mixer service 
Now I am starting to think if they already operated some of the mixers in the past, or they are planning to start one soon.

If there's money to be made, someone's going to do it. If they KYC all customers, they would even be allowed to advertise their "mixer" on Bitcointalk. But the business model will be so terrible, nobody will use it.

Are you sure about it?
I see more and more people accepting kyc for everything as normal, and same for face scans, kyc for social media, etc.

[lontivero]

It is equal to the Wasabi 'Black list' that I was against.  The point of Bitcoin was that every body is equal, whether you are from The United States or from the poorest country in the World.  If I am not treated equal to the rest of the users and I may have no right to Privacy because a Third Party said so, what is the difference between this and running my Money through a Bank.

FYI: Wasabi always uses Tor by default. zkSNACKs blocked access to the Website.

[ABCbits]

For such case, people could just continue to use legally registered exchange. Assuming the exchange doesn't leak/sell your data, simple/naive blockchain analysis unable to track you. But i wonder if this report make current cryptocurrency company bold enough to introduce legal mixer/privacy service.

Exchanges' compliance departments feel like they are almost as malicious as the hackers themselves sometimes.

You remind me that Fortune report that claim Binance fire investigator who find over $1B from Iran[1] and currently investigated by US government[2].

It is equal to the Wasabi 'Black list' that I was against.  The point of Bitcoin was that every body is equal, whether you are from The United States or from the poorest country in the World.  If I am not treated equal to the rest of the users and I may have no right to Privacy because a Third Party said so, what is the difference between this and running my Money through a Bank.

I don't remember the detail, but black list run by zkSNACKs is example why voluntary limitation doesn't work well.
1. Initially they forbid certain coin from their CoinJoin process.
2. Some months/years later they also forbid US citizen/user.
3. Shortly they decide to their CoinJoin coordinator/server.
4. At some point, zkSNACKs company appear to be closed.

[1] https://fortune.com/2026/02/13/binance-investigators-fired-iran-sanctions-potential-violations/
[2] https://www.blumenthal.senate.gov/newsroom/press/release/blumenthal-opens-inquiry-after-new-reporting-reveals-binance-allowed-17-billion-in-money-laundering-to-iran-proxies-and-russias-shadow-fleet