Why can't they just assume that those person are a shy type?
But seriously, not all who private themselves are doing something shady.
its not a simple legal/illegal yes no. thing
its a suspect/risk % scale. with thresholds.
Crypto has once gain a bad reputation but now that it was popular, the public already sees them as a regular currency. If they found someone who use the mixers for illegal activity, they should punish those users and not the mixers itself because they are only doing a business here and there is no way they open the business for the sole purpose of helping the criminals.
chip mixer was not shut down just for being a mixer. otherwise it would have been shut down years ago
it was shut down because regulators and businesses were WATCHING chip mixer because chip mixer is a risk of suspicious activity. and then in 2023 chip mixer GOT CAUGHT being directly involved with helping criminals.. much like the mixer that got caught last year. it was not that he was offering a mixing service it was that he directly helped and financially benefitted from processing criminal funds
I remember the authorities have also removed privacy coins in the exchanges before for the same reason but luckily those coins are still surviving.
regulators give guidance to VASP's and its the VASP that decides how much headache it wants to tolerate or avoid. and most VASPS just avoid accepting AEC to simply avoid questions/headaches later