What Is a Cryptomixer?

A crypto mixer is a service that obfuscates the origin of cryptocurrency transactions by mixing them with other users’ coins. This makes it very difficult for regulators to trace transactions and identify users. The service is often used by criminals to launder illicit cryptocurrency and avoid detection. This has led to several high profile Bitcoin mixers being shut down or facing sanctions by the US Treasury’s FinCEN.

Many people value increased privacy and anonymity for their cryptocurrency transactions. For example, individuals that live in oppressive regimes may use mixers to protect their privacy and safety, avoiding the risk of being targeted by government authorities or other institutions. Idealists also may value mixers because they believe that governments or other organizations should not be able to track their financial movements.

Cryptomixers are centralized services that take the coins deposited by users, pool them together and pseudo-randomly shuffle them. They then redistribute the new, mixed coins back to each user’s wallet, minus a small fee for the service. The process is transparent on the blockchain, but regulators can’t easily trace or identify the individual depositors from this pool.

Despite the obvious benefits, the cryptomixer industry has been hit with some high profile problems in recent years. As a result, it’s important that investors and users of these services perform thorough due diligence to understand the security of a crypto mixer before investing in or using it. For example, the cryptocurrency mixer ChipMixer was recently seized by Europol and is now associated with ransomware groups, illicit goods, and stolen crypto assets. cryptomixer

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