There are ways for completely obscuring who sends what to whom in bitcoin transactions. Using a bitcoin tumbler, sometimes referred to as a mixer, is one of the most well-liked methods. In this article we will talk about what is a bitcoin mixer and are they illegal?
What is a Bitcoin mixer?
The blockchain for Bitcoin is open to everyone. You can get a complete history of all bitcoin transactions since the currency's launch in early 2009 by checking a blockchain explorer.
That is not an issue, but rather a key characteristic for some. However, the public nature of the Bitcoin blockchain is a high privacy problem for people who need a little more anonymity. Then, they use Bitcoin mixers to keep bitcoin transactions entirely private. These tools mix up a certain amount of bitcoin in private pools before giving it to the people it is meant for.
The idea is to make it hard to know that person A sent person B 10 bitcoins by shuffling bitcoin through a black box. A public explorer will only show the fact that user A sent bitcoin to a mixer together with a dozen other users, and that user B received bitcoin from the mixer along with a dozen other users.
Are bitcoin mixers illegal?
Mixers are an obvious hotbed for money laundering because of their ability to obscure bitcoin transactions, attracting the likes of tax dodgers and criminals looking to hide the proceeds of their illegal transactions.
Depending on the country you are based in, using these services may or may not be illegal. According to former US Deputy Assistant Attorney General Brian Benczkowski, using mixers to hide cryptocurrency transactions "is a crime" in February 2021.
Roman Sterlingov, the Russian-Swedish founder of the bitcoin tumbling service "Bitcoin Fog," was detained by American police two months later for helping in the laundering of $335 million. Owner of the bitcoin mixer Helix, Larry Harmon, admitted guilt in August 2021 to assisting darknet market criminals in the laundering of almost $300 million.
The Financial Action Task Force's "travel rule" and the AMLD-5 directive, two new anti-money laundering rules, will make money laundering more difficult and may reduce the attraction of bitcoin tumblers for those looking to join in the wider crypto economy, the kind that depends on popular exchanges accepting your coins.
