I am reading an article about mixers and how they work. While reading came up with these questions:
1. How mixer works in terms of blockchain and transactions? Is it like you sending your own BTC to address of the mixer and the same is done by other people, and they just forward your BTC to another address of your choice?
The simple answer is here-
Bitcoin mixers, also known as tumblers, are services that receive cryptocurrencies from users, pool them together, and then send the amounts to their corresponding recipient addresses. This is an effort to obfuscate the transaction trail.
As far as I understand the bitcoin and how it works, once you send your BTC to someone you lost it. Isn't is risky?
Of course it's risky. But in this case it also depends on your choice, if you use scammer mixers then no one can stop you from losing your funds here. And to avoid it, first you have to explore and select a reputable mixer.
By the way, did you know that the new law is going to start on January 1st on bitcointalk about mixing service-
Mixers to be banned .
2. The article also mentions that some exchanges might refuse to receive 'dirty' BTC. How they define and later find out if particular BTC is 'dirty'? I mean what makes BTC 'dirty' or 'clean'?
Centralized exchanges can accomplish this by blacklisting wallets connected to mixers declared illegal. And dirty bitcoin refers to those bitcoins that have been acquired by doing criminal activities like- hacking, drug selling etc.
3. If you bought your BTC from well know CEX, should you be concerned? Is there a way to check for 'dirtiness'?
If you buy or sell Suspicious Amount Bitcoins they may send you a notice to show official documents from where the money or Bitcoins came from. This is one way to issue illegal checks and another option if funds come from blacklisted wallets.
example-
This is a screenshot of a recently seized mixer signatures campaign participants-