• Crypto mixers increase anonymity
• Criminals are increasingly using tumblers
• Cryptocurrencies are not an eldorado for money laundering
“Bitcoin is a highly speculative asset that has enabled some strange deals, as well as interesting and totally reprehensible money laundering activities,” the ECB President said Christine Lagarde once very critical of “Reuters” on the subject of cryptocurrencies. She joined the long line of critics who accuse Bitcoin and Co. of being a useful tool for money laundering and other illegal activities. Finally, blockchain technology enables anonymous money transfers because buyers and sellers are only recorded with their wallet numbers.
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Crypto mixer popular with criminals
According to an analysis report by Chainalysis, the so-called crypto mixers in particular have to put up with this accusation. The blockchain forensic experts have found that cyber criminals are very actively using such mixer service providers: In the course of 2022 so far, 10 percent of all funds from illegitimate wallets have been sent to a crypto mixer.
You have to know that with blockchain technology, the people behind a transaction remain anonymous, but the register is also publicly accessible, so that all cash flows can be traced. And this is exactly where crypto mixers – also called tumblers – come in and enable the greatest possible anonymity by mixing amounts of crypto money with those of other users in order to disguise transaction paths in this way. The use of tumbler services means that no connection can be established between the original transaction and the destination address.
According to Chainalysis, since 2020 it can be observed that the use of mixers has increased sharply from quarter to quarter. Meanwhile, in the year to date, 23 percent of the funds sent to Mixer went to illegal addresses – a new record. In 2021, this share was only about half as large at 12 percent.
Mixers would rarely if ever collect KYC (Know Your Customer legitimacy check) information. Therefore, they represent “a significant risk of money laundering,” according to the US analysis company.
Cryptos not an Eldorado for money laundering
However, Chainalysis does not accept the general accusation against the crypto sector. According to “BTC-ECHO”, the researchers determined that money laundering using cryptocurrencies would increase by 30 percent in 2021 compared to the previous year. At 8.6 billion US dollars, this accounted for just 0.05 percent of the total trading volume of all cryptocurrencies. “It’s a common misconception that cryptocurrencies are primarily used for illegal activities,” Gurvais Grigg, Global Public Sector Chief Technology Officer at Chainalysis, told BTC-ECHO.
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