Crypto Mixers: Privacy Tools That Emerged as Safe Havens for Scamsters

Share

Crypto mixers are privacy tools that help make crypto transactions between two parties completely anonymous. The idea behind crypto mixers is to remove any digital signatures associated with a particular trade and maintain privacy. More often than not, crypto mixers do not ask for Know-Your-Customer (KYC) information, that make them appealing for scammers churning capital from duping non-suspecting investors. Nearly 10 percent of all funds sent from illicit addresses are sent to mixers, a report by Chainalysis has recently attested.

Tornado Cash, Blender, ChipMixer, FoxMixer, and Anonymix are some examples of crypto mixers that are popular among users. The category of crypto service is infamous for being exploited by money launderers to ‘clean’ the funds in their possession.

Transferring funds to the destination wallet via a crypto mixer needs the assets to first be mixed into a private pool. The deposited virtual tokens are then mixed with other people’s tokens before being transferred to the destination wallet.

Nearly 10 percent of all funds sent from illicit addresses are sent to mixers, the Chainalysis report said earlier this year.

Funds sent to mixers by cyber-criminal groups linked to Russia and North Korea, have risen dramatically between 2021 and 2022.

Russian darknet market Hydra, which was sanctioned in April 2022, accounted for 50 percent of all funds that were moved to the mixers from sanctioned entities this year alone.

While crypto mixers are not entirely illegal, they could be dragged under the legal scanner for financial investigation purposes.

Crypto exchanges can also flag details of those users who use crypto mixers very frequently to carry out transactions.

The percentage of funds passing through crypto mixers from the custody of cyber criminals touched $51.8 million (roughly Rs. 413 crore) in April 2022. This marks the highest volume of crypto funds so far to have been wired to destination wallets via crypto mixers.

Recently, when hackers earned ETH 275 from selling stolen NFTs from the Premint attack were wired into unknown wallets after having been passed from the TornadoCash crypto mixer.

Blockchain security firms like Chainalysis are working on bringing out tools that can reverse-engineer and demix transactions processed via crypto mixers.