Monday, 4 March 2024

Crypto News

Can crypto mixers adapt to survive US authority prosecution?

Can crypto mixers adapt to survive US authority prosecution?

Tornado Cash — a cryptocurrency mixer service that can hide the origin of crypto transactions — hit the headlines after being sanctioned by the United States Department of the Treasury’s Office of Foreign Assets Control (OFAC) in August 2022. 

The mixer opened Pandora’s box, igniting an open debate about the role of mixers in ensuring personal financial privacy when using cryptocurrencies.

U.S. authorities have continued sanctions against these services, with being the most recent big player under OFAC sanction. Tornado Cash and Sinbad have been taken down by the FBI, with the U.S. Treasury accusing them of facilitating billions of dollars in illicit transactions, particularly those of North Korea-based hacking group Lazarus.

An anonymous representative of mixing service Mixero told Cointelegraph that mixers, such as Tornado Cash and Sinbad, are popular with North Korean hackers because of their “substantial cryptocurrency reserves, which enable North Korea to transfer large amounts at once, thus saving time.”

Despite their reputation, mixers provide a legitimate service by keeping cryptocurrency transactions private. However, criminals using mixers to launder millions of dollars may threaten the legitimate use of these services by ordinary users seeking financial privacy when using cryptocurrencies.

The role of mixers in financial privacy

Cryptocurrencies have evolved in their properties and usage, but currently, for the mainstream audience, they are still often seen as synonyms for a totally private medium for illicit activities.

Contrary to this misconception, cryptocurrencies are not fully anonymous. The underpinning blockchain technology for most of the top cryptocurrencies is an open ledger in which all transfers are public.

For example, the most popular cryptocurrency, Bitcoin (BTC), is only pseudo-anonymous. BTC addresses don’t necessarily reveal their owner’s identity, which provides a layer of privacy.

However, if a unique transfer is linked to their identity, all historical past transfers and future movements can be tracked to that individual. Convertible virtual currency (CVC) mixing — the service provided by crypto mixers — was created for that core reason.

There are many instances where citizens might want financial privacy, such as ordering delivery food and paying with cryptocurrency. The courier or the delivery company shouldn’t be able to see your daily transactions or the total money in your wallet. In this…

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