What is a Cryptomixer?

The cryptocurrency industry has boomed and grown at a breakneck pace. However, its size remains a fraction of the global financial system. While this has been a boon for investors, it also poses a unique challenge for regulators seeking to curb money laundering. While cryptocurrencies have their own set of risks, traditional money laundering methods using high-street banks, shell companies and offshore accounts continue to pose far greater threats to the global economy.

Crypto mixers, or tumblers, allow users to obfuscate their blockchain transaction history, making it more difficult for outside parties to trace individual coins back to their source. They can be useful for individuals in countries with oppressive regimes who want to protect their privacy, or for anyone looking to reduce the risk of being politically exposed by outspoken opinions on social media.

There are a number of different types of crypto mixers available. Most are non-custodial, meaning they don’t hold onto the user’s wallet or assets. The way they work is by accepting tainted crypto from multiple users and mixing it with clean cryptocurrencies to create a pool. Then they send each customer’s cleaned funds back to them in smaller, randomized amounts.

Centralized mixers are similar to the centralized exchanges that allow you to buy and sell cryptocurrencies. They accept your tainted bitcoin and mix it with other coins in a large pool, then return the newly mixed coins to you. These services offer convenience, but they come with a price: the centralized service has a record of both your incoming and outgoing bitcoin and may reveal your identity should it be hacked or subject to a data breach. cryptomixer