[2019-08-28] Nearly Half of the Funds Sent to Bitcoin Mixers Come From Exchanges

Carlton Banks

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Quote from: 1Referee on August 31, 2019, 02:23:25 PM

Quote from: Carlton Banks on August 31, 2019, 03:28:34 AM

why are you making more than 1 thread about negative news stories?

Why do you consider this thread to be a negative story?

well to me it's kind of neutral

but @nulltxmark has been copy-pasting threads in this Press board twice over the past few days, and did so for 3 stories that all could be perceived to have a negative slant, just not by me

the threads were literally posted originally by @nulltxmark, and by @nulltxmark the 2nd time too. But it's just a mistake, right @nulltxmark?

o_e_l_e_o

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Quote from: gentlemand on September 01, 2019, 02:05:06 PM

It's the exchange you need to worry about.

Precisely.

I wouldn't care if a business I'm paying in bitcoin found out if the bitcoin came from Coinbase or Binance. There is essentially nothing they can do with that information; they can't link my output from the exchange to my input transactions.

I would care a whole lot more about an exchange I have potentially completed KYC procedures on knowing where I am spending my bitcoin.* Half the appeal of bitcoin is to move away from having some faceless central authority keeping a record of everything I buy, how much I spend, when I spend it, where I spend it, how I spend it, and so forth. You can bet your bottom ~~dollar~~ satoshi that exchanges are tracking where and to whom you are sending any coins that leave your account. Much like with Amazon, Google, Facebook, etc., several big exchanges have already admitted to selling client data to third parties. Hence the appeal of mixers.

*I'm not doing anything illegal with my bitcoin, nor have I completed KYC on any exchange, but speaking hypothetically.

pixie85

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This is interesting because with the amount of stolen and hacked coins going through mixers one could think that it will greatly outnumber normal users.

I'm not against mixers people should be able to hide what they're buying and mixers allow them to do it. We shouldn't measure the service by the negatives but positives and it makes mixers much needed. We shouldn't attack mixers just because they allow scammers to hide their coins. There was an option to taint coins and the majority of users did not want it so if we aren't blocking stolen coins there's not much that can be done to stop scammers from taking profit.

hatshepsut93

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Quote from: gentlemand on September 01, 2019, 02:05:06 PM

I thought it would be the opposite. Exchange payouts will come from pools with no link to your deposits. Quite a few exchanges will give you a static deposit address, which is not good, but the outputs will be random.

If I were a regulator, I would require all exchanges to use deposit addresses only once, because this is so horrible from the privacy point of view - this exchange address can link so many user's transactions together in an instant. Ofc governments will require exchanges to keep logs of all adresses, but at least it will be harder to get a ton of transaction history for a user by just looking at blockchain.

gentlemand

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Quote from: Kakmakr on August 29, 2019, 01:27:33 AM

Well the answer for this is quite simple, because the users of these exchanges knows that exchanges have strict KYC requirements and that your wealth can be traced back to these exchanges, so before they spend or transfer coins to other people or businesses, they use Mixer services to remove the link between them and those exchanges. The exchanges are not providing any protection against people tracing the origin of your coins, so you have to use services that provide that option.

Why should some obscure business know what exchange you are using, by simply copying and pasting your Bitcoin address into a website that trace people's coins? < BlockCypher > Huh

I thought it would be the opposite. Exchange payouts will come from pools with no link to your deposits. Quite a few exchanges will give you a static deposit address, which is not good, but the outputs will be random.

I couldn't care less if a business knows coins have come from an exchange. They've no idea what transaction they came from. It's the exchange you need to worry about.

BitHodler

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Quote from: buwaytress on August 31, 2019, 09:55:27 AM

It is good to see that we're getting some evidence that's contrary to accepted wisdom. Not that the evidence would stand up any better to proper scrutiny either.

It's not easy to make the general public accept the benefits of something they think don't need and at the same time is a very niche sort of a service. It will take years before the sentiment around mixers clears up.

A pretty large number of people just can't fathom how important privacy is, otherwise they wouldn't have sold themselves to Facebook and other social media platforms already and therefore think it's normal, unfortunately.

When Libra becomes an actual thing people will regret having been so open to Facebook after getting their payments blocked and account limited in some way. It's going to be the reality of the day.

1Referee

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Quote from: Carlton Banks on August 31, 2019, 03:28:34 AM

why are you making more than 1 thread about negative news stories?

Why do you consider this thread to be a negative story?

I find it quite fascinating and cool that people don't let themselves be stopped from transacting with the services/people they want. Coinbase for example terminates your account when you use the coins you bought on their platform for gambling purposes. By using a mixer people can add an additional layer of privacy and still do whatever it is that they want, and that without having to worry about their accounts being teminated.

This is a perfectly legitimate use case for mixers. This is technically what they are for. Without them people would have less freedom.

cr1776

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Quote from: ?? on ??

This is proof that people still care about their privacy, even with KYC/AML and chainalysis itself.

Imagine what'll happen if government knows you donate to certain group (politic, religion, etc.) or whoever receive a payment from you know how much Bitcoin do you have.

..l

Hence why FB etc want Libra so that they'll be able to have a product they can also provide the governments.

There is some cognitive dissonance going on within the governments of the world: do we care more about knowing everything people are spend money on or more about controlling the money supply.

Right now controlling the money supply wins because they can get the rest of the information other ways.

buwaytress

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Quote from: nulltxmark on August 28, 2019, 07:10:47 AM

Bitcoin mixing does not have the best of reputations. It is a method often associated with criminal activity and money laundering. A new report by Chainalysis puts an interesting spin on this particular business model. The majority of funds does not originate from stolen funds or darknet markets, by the look of things. A surprising turn of events, although it will not change the public perception of Bitcoin mixing just yet.

The Origin of Bitcoin Mixing Funds

The report by Chainalysis paints a very interesting picture as far as mixing Bitcoins is concerned. Although it is evident that this model will always be associated with money laundering, the ones potentially doing so are very different from what was originally assumed. Very little funds passing through these services comes from the darknet or ends up being stolen. Both “aspects” combined only represent 10.8% of all funds sent through mixers.

That is quite surprising, although it doesn’t necessarily make the origin of the funds more legitimate either. The money sent from unnamed services, mining pools, and gambling could still carry some sort of taint. It is of the utmost importance to further analyze that source of money to make sure nothing nefarious is going on. Especially the figures regarding gambling are pretty interesting, as most people assumed a lot of gambling proceeds would be laundered to remove any trace of origin.

Read More: https://cryptomode.com/nearly-half-of-the-funds-sent-to-bitcoin-mixers-comes-from-exchanges/

Reputation. It's a funny thing. Some would say Bitcoin hasn't been able to shrug off the reputation given to it by mainstream media (and I'm not even sure shifting reputation from drugdealer currency to super volatile asset used to run scam ICOs is preferable).

It is good to see that we're getting some evidence that's contrary to accepted wisdom. Not that the evidence would stand up any better to proper scrutiny either.

And yes, while the origin of funds doesn't become more legitimate, neither does it make them more illegitimate when and if they should come from dark markets.

Not sure what it means by ending up being stolen though. You mix bitcoin and they end up getting stolen, is that implying some mixers are scams?

joelsamuya

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This can be a surprising news since we are assuming that mixers are mostly processing tainted cryptocurrencies and are done to get away from anti-money laundering law which many countries adopted. The thing is that people are using mixers to make their transactions anonymous which Bitcoin could and would not provide. Is this a good news to the withering mixer business or what? Maybe yes but still many are afraid to get into the mixing business because governments can easily get them anytime.

Carlton Banks

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@nulltxmark

why are you making more than 1 thread about negative news stories?

talk

Kakmakr

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Well the answer for this is quite simple, because the users of these exchanges knows that exchanges have strict KYC requirements and that your wealth can be traced back to these exchanges, so before they spend or transfer coins to other people or businesses, they use Mixer services to remove the link between them and those exchanges. The exchanges are not providing any protection against people tracing the origin of your coins, so you have to use services that provide that option.

Why should some obscure business know what exchange you are using, by simply copying and pasting your Bitcoin address into a website that trace people's coins? < BlockCypher > Huh

nulltxmark

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Bitcoin mixing does not have the best of reputations. It is a method often associated with criminal activity and money laundering. A new report by Chainalysis puts an interesting spin on this particular business model. The majority of funds does not originate from stolen funds or darknet markets, by the look of things. A surprising turn of events, although it will not change the public perception of Bitcoin mixing just yet.

The Origin of Bitcoin Mixing Funds

The report by Chainalysis paints a very interesting picture as far as mixing Bitcoins is concerned. Although it is evident that this model will always be associated with money laundering, the ones potentially doing so are very different from what was originally assumed. Very little funds passing through these services comes from the darknet or ends up being stolen. Both “aspects” combined only represent 10.8% of all funds sent through mixers.

That is quite surprising, although it doesn’t necessarily make the origin of the funds more legitimate either. The money sent from unnamed services, mining pools, and gambling could still carry some sort of taint. It is of the utmost importance to further analyze that source of money to make sure nothing nefarious is going on. Especially the figures regarding gambling are pretty interesting, as most people assumed a lot of gambling proceeds would be laundered to remove any trace of origin.

Read More: https://cryptomode.com/nearly-half-of-the-funds-sent-to-bitcoin-mixers-comes-from-exchanges/

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