Topic: First Bitcoin Mixer Penalized by FinCEN for Violating Anti-Money Laundering Laws (Read 318 times)

They will require that he (and every other mixers in the US) collects those information from those who wants to get their coins mixed, so that in case there should be any case of hacking or such, they will be able to trace those people, even if they should make use of mixers to mix those coins to cover up.

I know that some people (just like me) are going to hate this, because they prefer having some privacy with their activities online, but these things are being done for security reasons, and I understand that. That’s why I never bother much, and after giving it a thought, I just agree with it. These laws don’t apply to every country, there are mixers that are in countries where there wouldn’t be laws like this one.

I agree people can be deanonymized through cookies and other leakage of identifying information through browsers, and that this can be used to tie BTC transactions to real world identities. However, that doesn't mean collecting browser fingerprints or cookies is sufficient to comply with Fincen regulations.

This ties back to the article in the OP:

Security researchers have spent more than the last 10 years trying various methods to break TOR. Here's a classic example from 2007:



People have been known to receive ads related to topics they mentioned out loud or through texts on phones. Also ads indexed according to items they recently bought in stores. Etc. AFAIK there are extensive networks of data mining which ID people using cookies, email addresses and other seemingly innocuous methods of tracking. Registering an email on a bitcoin faucet or allowing cookie tracking might be considered forms of KYC. A mixer wouldn't necessarily require a full KYC check. It could only need to participate in whatever information gathering networks exist, while disabling anonymizing services.

Mistake #1, administering the Silk Road from the US. You may have noticed Harmon (operator of Helix) did the same thing. Smarter operators are doing so from within countries that do not extradite to, or cooperate with, the US government. That makes it a completely different ball game.


Mixers who don't advertise themselves as a money laundering service still have Fincen regulations to consider. They probably couldn't be charged with the conspiracy charges Harmon got hit with, but operating an unlicensed money transmitter could still be on the table. We can't know for sure until the US government makes their next move.

The weird part of these companies that will get caught will be the way they are not as anon as they think they are, your trace could be as cold as it could potentially be but you are a person and you know other people, one word and you will be on hook for watching by FBI or any other organization.

So, "mixers" could be safe for the user for a while, maybe not even that, but the owner is still one person and they could get caught very easily. Even silkroad was disbanded and they did basically everything right but with one or two mistakes and you could be at the end of the world and they will find you. So, I would say just because you think you have the tech behind all of this to save yourself, you should not do anything illegal anyway, they are illegal for a reason.

The thing about Harmon's Helix mixer is he introduced it as some form of anonymizing payments for criminals to take advantage to which make his service in itself as a form or accessory for the crime being committed, this thing alone will just make them guilty of a crime. For normal mixers who just promotes their mixing service as a way to protect your privacy is something that won't alarm anyone, yes it still might be used by some criminals but it doesn't raise any flags as they aren't really directly connected to any kind of crime. So mixers as a whole might not be affected here.

Indeed it is better that way

If they destroyed the Darkweb in its entirety (let's assume they can, which is not set in stone), something more resilient and resistant would inevitably pop up in its place instead (like Monero instead of Bitcoin). There's some point of maximum effect, and it certainly lies somewhere between full control, when no criminals are any longer using this network, and complete elimination, when they start to use something else, with the outcome being essentially the same. Simply put, it is a matter of proper balance and choosing the lesser of two evils

People can still launder money by using mixers. We can't control them but maybe government agencies can trace or track. It would be a waste if someone wants to send crypto privately even if it is a small amount since they wanted a privacy in sending crypto and money laundering people use such mixer to launder money. That is a disadvantage for mixers.

I think they've got their wording wrong.

It should read - Man penalised for violating anti money laundering laws via mixing.

He explicitly set it up solely to aid the movement of drug money. That's nothing like a bog standard mixer being descended on out of nowhere for handling one random reprobate's funds.

Well, this is part of reasons transactions should be recorded on decentralized/shared ledgers that should remain unchanged/immutable.

I'd suggest that before a coin mixing service mixed coin for people, it should try to make sure that its customers have something that can identify them, and such identifiers or personal/private identifications have to be controlled by their owners/customers and also distributed on a shared decentralized network/system, in a thoroughly encrypted/cryptic  and immutable form.    The activities generated after  mixing coins for customers could then be linked to the customers' encrypted personal identities. If a serious crime or violation is committed with the mixed coins (output), it can be tagged and investigated by law enforcement people. The tagged coins could be destroyed once its owner have been found guilty of the crime, his/her encrypted identity decrypted/de-anonymized.... then virgin/new coin generated as replacement for the tainted one. If the coin has been negatively tagged but now controlled by innocent new owner, the tag could aswell be removed from the coins once the former owner who committed the crime have been justly convicted.
 I prefer the burning/destroying of coins that have been tainted by people who have been convicted after committing serious crimes with them. You burn the coins and another are immediately created as replacement!

The biggest concern now is the collection of personal details with regards to who uses their service. That could definitely affect the current mixers running unless they have their own personal identities safe away from any law. I'm not sure how he would get out of this one, though.

It can be compared to gambling, like the licenses of the famous online companies are based and legalized in another country. Since it's online, there is still access. That's what could happen to mixers.

This is true.However,the darkweb still exists...
I wonder why FBI,NSA,CIA didn't simply destroy the darkweb,since they control most of the Tor Nodes,proxies and they can request personal data from the VPN providers?Maybe spying the darkweb is better than destroying it?


I agree.Having a BTC mixer located on offshore servers is the safest bet.On the other hand,there's still a way around this.The USA authorities might require all the US internet service providers to block access to websites,which are located on offshore servers.

I guess it's inevitable. The authority really can't rule out the possibility of money laundering in mixers. I think the first mistake he made is that he wasn't able to hide his identity or his location. I mean, he's unregistered and his service is suspicious, it's not too long until they sniff him out.

This news might serve as a warning to mixer operators.

I doubt that. KYC would completely negate the purpose of using a mixer in the first place.


Exactly. This isn't the same situation as Bitcoin exchanges, who have serious risk exposure due to bank accounts. A competent mixer should be run from multiple non-extradition countries who generally don't cooperate with the US government (aka the world police). In the worst case scenario where clearnet domain and servers are seized, the service can be re-seeded within a matter of days.


My understanding is he was operating it from Ohio, and remained there long afterwards where he was eventually arrested. Not very smart.

That’s also my thinking since they don’t have KYC and AML already knows that there’s a malicious transactions on-going in cryptomarket especially on Mixers, they are on big risk to face the same faith. It looks like, we really have no choice to remain anonymous, but that’s fine if you’re just a simple crypto users. Scammers, hackers, and money that is being used for terrorism is already happening on crypto space, AML is working for this one closely. I hope that those Mixers who are still in operation will come up into a solution for this one so they won’t ended up like this.

This means any mixer that are operating now are prone to getting penalized and shot down, regardless of what they offer or security they have, people can still use them for money laundering, that is for a simple reason that they don't require a KYC and all transactions are anonymous.

So meaning that there could be second or more bitcoin mixer could be penalized or punish by law because of money laundering?

What can we expect? This is the feature of bitcoin mixer is to only be use the service of mixing bitcoin parts and make it as a whole. If there is money laundering happen then it should not be the service to get punished instead those people who are using the service. So sad that there are really mistakes and misconception regarding services like this and now being accused in money laundering.

Many stopped their operations due to this issues but this is the first time to hear a legal actions against a mixer. Well, Mixers is indeed against the AML because we don’t know the identity of the users and they can easily mixed their coins and leave no traces behind. I’m still proud that some mixers are still doing good right now, I just hope that they are not being used by the hackers and scammers.

There's another consideration

We don't how many mixers out there are actually honeypots, i.e. run by government agencies to catch criminals, which is virtually anyone using such a service (from a government point of view). Paradoxically, but governments may not be interested in shutting down this activity altogether, at least as long as they can control the best part of it. They can even turn a blind eye to some small-time criminals so as not to expose and betray themselves when going after big fish

I think this point is a bit misleading. VPN's are regularly used to connect to a local network within a company and that type are very unlikely to be of interest to the intelligence agencies. Proxies can also be used for both good and bad. However TOR nodes tend to have a slightly different reputation and are not commonly used in general commercial enterprises. Grouping them all up is a bit unfair. In response to the main piece of news: these bitcoin mixers literally have no other purpose than to disguise the source of funds, which is pretty much the definition of money laundering and it was always going to end up badly for them. Kind of glad that law enforcement have finally taken some action, as it has been going on for years.