Cryptocurrency mixers are being used more heavily than ever in 2022. What does this mean?
In April 2022, the most popular Etherium mixer blocked addresses that are on the US sanctions list. The event had no effect on the platform’s decentralization level, as the blocking only affected the application’s frontend and not the smart contract itself. In any case, lawbreakers continue to interact with the mixers at a fairly active pace – and they are not the only ones. We tell you more about the situation and the reasons behind it.
As a reminder, a cryptocurrency mixer is a platform that allows cryptocurrency owners to hide their traces of ownership of it. In general, such solutions work on the principle of trading exchanges. First, the user tops up the platform, then waits and after a while requests a withdrawal of coins to another address. Since cryptocurrencies of different owners are intermingled on the service, it is difficult to trace their origin.
In addition, cryptocurrency payments to a new address are made in several stages and portions, making it even more difficult to track down the same person’s address.
Interface of Tornado Cash platform – one of the most popular cryptomixers in the world
The year 2022 has already seen the rise in popularity of cryptocurrency mixers. And they are mostly used by cybercriminals and sanctioned countries.
Who uses cryptocurrency mixers
Representatives of the already familiar Chainalysis company studied what is going on with cryptocurrency mixers. According to their data, it is representatives of certain states and cybercriminals who are responsible for most of the cryptocurrency sent to the mixers. In addition, experts note that this year has seen an increase in the proportion of coins being transferred from addresses whose owners are outside the law. Here’s a relevant quote from experts cited by Decrypt.
As of today, banned addresses account for 23 percent of all funds used in cryptocurrency mixers. Meanwhile, the figure was 12 per cent in 2021.
Representatives from the team of analysts point out that sometimes cryptocurrency mixers are not behind the use of illegal motives, as covering their tracks can be useful for traders who live in countries with repressive governments or who simply want to achieve anonymity when using cryptocurrencies.
However, this is the exception rather than the rule. Experts continue.
Be that as it may, the basic functionality of mixers, combined with the fact that they usually do not require user identity confirmation, make such platforms attractive to criminals.
Chainalysis staff clarify that cryptocurrency mixers have already received more coins in 2022 than ever before.
Cryptocurrency hacker
That said, the position of such platforms in the US is in question. Specifically, cryptocurrency mixers in the US are considered a money transmission platform under the Bank Secrecy Act. Well, they in turn must register with the Financial Crimes Enforcement Agency and implement tools to combat potential money laundering.
As noted by Chainalysis, they have not yet heard of any money laundering compliant mixers. Accordingly, the position of such platforms in the US is not to be envied.
According to sources, US authorities have repeatedly fined and imposed sanctions on some cryptomixers since 2021. For example, in August 2021, the head of a Bitcoin mixer called Helix was found guilty of money laundering charges. As it became known more than a year before this event, 354,000 bitcoins, equivalent to $300 million at the time, had passed through this platform. And the authorities didn’t like it – Harmon was ordered to pay a fine of $60 million.
In May, representatives of the Office of Foreign Assets Control in the US imposed sanctions against the cryptocurrency-mixing platform Blender, which in doing so has been linked to North Korea. According to agency officials, at least $21 million of the $622 million stolen due to the Ronin bridge hack went through Blender.
In general, blenders are indeed actively used by criminals. Last month, for example, hackers sent the equivalent of $36 million stolen in the Horizon bridge hack from the Harmony protocol to the Tornado Cash mixer.
According to Chainalysis, the mixers mainly receive coins from centralised exchanges and protocols in the decentralised finance niche. Among the addresses are those linked to illegal activity towards sanctioned countries, darknet markets and hackers.
Cryptocurrency hacker
We believe that cryptocurrency mixers will continue to gain momentum. And it's important to keep in mind that it's not just criminals and hackers who use them, so such platforms hardly deserve to be unequivocally negative about themselves. It is simply a tool that people use as they see fit. And the number of blockchain platform hacks due to the trivial existence of cryptomixers is also unlikely to increase.
What do you think about what’s going on? Share your thoughts in our Millionaire Crypto Chat. There we will discuss other important developments in the blockchain world.
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