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I still don't understand how crypto mixers are supposed to work. Surely if you dump stolen crypto into a mixer with other bitcoins then all of it can and should

by ginko 3y ago

I still don't understand how crypto mixers are supposed to work. Surely if you dump stolen crypto into a mixer with other bitcoins then all of it can and should be treated as tainted.

TrapLord_Rhodo 3y ago
btc's aren't real. There is no such thing as a bitcoin. It's just a ledger system, so if you can hide/ or obfuscate the wallet address the btc are pointing to, you can hide the transaction history. Now this involves transfering BTC for another asset and then purchasing clean bitcoin on the otherside with a headless transaction in the middle. A random number of different wallets, and ledger entry's but it's all the same to the user.
_cenw 3y ago
Sure, it's more obfuscation than money laundering, but it can still make it hard to trace given sufficient participants. One big part is also splitting up a big single wallet into lots of smaller ones, so now you need to differentiate your privacy freak from your marketplace consumer from your small time marketplace seller from people you actually want to catch. You can also repeat the process. Eventually the traces become hard to follow, especially when the person only uses relatively small fragments from the output.
paulpauper 3y ago
plausible deniability
searchableguy 3y ago
I don't know about bitcoin but for Ethereum, many big mixers were funded by advocates for privacy. So there is deniability if you mix your illegal proceeds with legimate ones. It's not much different from cash in a way. It's also possible to remove the link to mixer if you bridge on the Ethereum side. So you would have a wallet with a different currency with no link back to where it came from.
mprime1 3y ago
It often is. I had my PayPal personal account immediately frozen and closed without recourse just for (unintentionally) putting a few hundred dollars of bitcoin through a mixer. 1. Purchased $200 of Bitcoin via PayPal (never doing this again — took weeks to settle) 2. Created a receiving wallet address with a wallet app 3. Moved Bitcoin from PayPal to new wallet address. This was innocuous, I wasn’t trying to cover my tracks in any way. What I didn’t know is that the wallet had an automatic tumbling feature, so the money I put in got mixed. And PayPal immediately closed my account. Tried every way to get it back but no dice. All funds frozen for 6 months before I could redeem them. So yes using a mixer can get you tainted.

by ginko 3y ago

I still don't understand how crypto mixers are supposed to work. Surely if you dump stolen crypto into a mixer with other bitcoins then all of it can and should be treated as tainted.

TrapLord_Rhodo 3y ago

btc's aren't real. There is no such thing as a bitcoin. It's just a ledger system, so if you can hide/ or obfuscate the wallet address the btc are pointing to, you can hide the transaction history. Now this involves transfering BTC for another asset and then purchasing clean bitcoin on the otherside with a headless transaction in the middle. A random number of different wallets, and ledger entry's but it's all the same to the user.

_cenw 3y ago

Sure, it's more obfuscation than money laundering, but it can still make it hard to trace given sufficient participants. One big part is also splitting up a big single wallet into lots of smaller ones, so now you need to differentiate your privacy freak from your marketplace consumer from your small time marketplace seller from people you actually want to catch. You can also repeat the process. Eventually the traces become hard to follow, especially when the person only uses relatively small fragments from the output.

paulpauper 3y ago

plausible deniability

searchableguy 3y ago

I don't know about bitcoin but for Ethereum, many big mixers were funded by advocates for privacy. So there is deniability if you mix your illegal proceeds with legimate ones. It's not much different from cash in a way. It's also possible to remove the link to mixer if you bridge on the Ethereum side. So you would have a wallet with a different currency with no link back to where it came from.

mprime1 3y ago

It often is. I had my PayPal personal account immediately frozen and closed without recourse just for (unintentionally) putting a few hundred dollars of bitcoin through a mixer. 1. Purchased $200 of Bitcoin via PayPal (never doing this again — took weeks to settle) 2. Created a receiving wallet address with a wallet app 3. Moved Bitcoin from PayPal to new wallet address. This was innocuous, I wasn’t trying to cover my tracks in any way. What I didn’t know is that the wallet had an automatic tumbling feature, so the money I put in got mixed. And PayPal immediately closed my account. Tried every way to get it back but no dice. All funds frozen for 6 months before I could redeem them. So yes using a mixer can get you tainted.