Topic: which online "wallets" commingle funds? (Read 334 times)

centralized exchanges.

i use coinbase pro to cash out fiat---i don't love it but it's the only exchange i ever KYC'd on many years ago---and i am extremely paranoid about what outputs i deposit there. tbh i dunno how long they will even keep tolerating customers like me who always deposit coins from no-KYC exchanges like binance, kucoin, bitmex.

i do occasionally trade on localcryptos for cash (in which case this is not a concern) but there isn't enough constant liquidity in the p2p markets for what i need. as a longtime bitcoin swing trader i gravitate towards thick order books since i can't afford to wait around for hours/days/weeks for trades to come through. those wait times can equate to lots of money lost.

Absolutely. Allow me to elaborate:

Pretty much all exchanges are tracking your deposits back multiple transactions and your withdrawals forward multiple transactions. They do this to ensure they are complying with AML regulations, funds aren't arriving from or being sent to illegal darknet markets, etc. Whereas (emphasis added):

Some like Coinbase also lump things like mixers, casinos, sportsbooks, and as you say, coinjoin transaction, in to the list of "unsavory" things that they do not permit their customers to spend their own money on.

Genuine question - where are you sending or spending your bitcoin that you need "clean" outputs? I have used various mixers in the past, including ChipMixer a lot, and have started to use some coinjoining as well. I have never once encountered a problem spending my "tainted" coins, but I also don't use centralized exchanges at all.

i would emphasize that you cannot lump coinbase together with all exchanges. many exchanges will do no such thing.

specifically, binance.com and kucoin (unless things have changed very recently) do not have any terms prohibiting gambling. you can freely send them coins from gambling sites---i have---and withdraw "clean" coins from their hot wallet.

it's probably sensible to do a few nominal trades so it doesn't look like you're just using them to pass funds through.


it may not be taint that gets you, but simple association with wasabi wallet coinjoins. multiple exchanges have acted adversely against customers who deposited/withdrew such funds.

i would much rather own clean outputs withdrawn from an exchange than coinjoin-linked outputs---at least until bitcoin privacy is improved enough to obfuscate coinjoins. sadly, that is the price of fungibility.

Doesn't matter. Coinbase and other exchanges will track coins backwards and forwards multiple transactions. If coins are going from casino -> wallet A -> exchange -> wallet B -> casino, then the exchange will rapidly pick up on that. Even if you add multiple hops in between casino and exchange, once you've done something similar a few times your account they will pick up on it. If you are using an exchange which looks down on gambling and casinos, then your account will be flagged up and frozen, and expect any coins you have on the exchange to be inaccessible.

Further, not all mixers charge 2%. ChipMixer can be used with any fee you like.

Then use a larger anonymity set. If you use an anonymity set of 50, for example, then any link to "tainted" bitcoins is diluted beyond meaning.

This is not true.  Coinbase's miner fees are often too low to get a quick confirmation.   2% is orders of magnitude higher than miner fees tho unless you're buying coffee.   I could afford it, but 2% feels like overpaying.   If I use Wasabi coinjoin I get directly linked to one particular rando who might have dirty coins, which is not as good as getting clean coins from coinbase.

he could always use a non-KYC exchange like binance or kucoin. they keep logs obviously, but he isn't worried about state adversaries anyway. this would prevent the need for KYC while suiting his desire to obfuscate outputs on-chain, and secondarily would produce "clean" coins. AFAIK it is not against the terms of either exchange to use funds associated with gambling and they both pool funds, as do most exchanges.


that CFTC violation only regarded margin accounts---spot exchanges, and margin exchanges outside the USA unaffected.

As per the OP and post #9, BitwiseOperator's not even willing to pay for a "mixing service",
why do you think he will even pay for "virgin coins" which is priced about 20% more than it's worth?

Why not contact with miners and thus you can get virgin or at least clean coins without any history that might link them to criminal activities.
All mixing services other than the above method offer currencies that have a record that may be associated with any dark activity so you cannot trust them.
some custodial service you will be banned from your account if you mix currency.

My 2 cents:

When a regulated body receives your coins, they have to run them through a chain scoring service, which in itself is another regulated activity whose endgame is to tie on-chain funds to IRL identities. This is as hard of an erosion of financial privacy as it gets.

Let's be clear though, there is no such thing as a right (either negative or positive) to financial privacy in the legacy (fiat) system. The primary interlocutor for a regulated service is, well, the regulator. Customers come last typically. This is grandfathered into any new fintech markets from the legacy system design, and there isn't a lot you can do about it.

Getting back to the score chain services, there is another side to this story: these guys use a set heuristics (fairly dumb ones if you ask me) to flag coins on chain. Their heuristics may improve with time but one that isn't going to change is that coins that come out of a regulated exchange are considered clean. This therefor an alley to "launder" your coins from the perspective of these services, and regulators in general: get them in and out of an exchange. I believe this is what OP is referring to, and to be clear, I do not recommend doing this at all.

If you suspect your coins need cleaning, either because they are tied to your identity or flagged for whatever reason, passing them through an exchange will not do you much good. There are better ways to achieve this without handing out your SSN and a rectal scan to Coinbase.

There is also no guarantee a custodial service will pool their customers coins. There is actually regulatory precedent against that in the US, where BitFinex was ordered to hold individual wallets per customers, which is the precursor to the whole mess with BitGo that led to that 300k something heist back in 2018 (I believe, don't quote me on the year). You're better off observing their on-chain activity to get an idea whether they pool coins or not. On that basis, I'm gonna go on a limb and assume BitMex does pool to an extent.

On the other side, in the EU, custodial operators are obligated to keep track of user funds (I don't know to what specific extend). You should expect any service that is available in the EU (regardless of where they are based and the other markets they serve) to homogenize their customer tracking with that of the most restrictive jurisdiction they operate in (in this case, the EU). So looking at services that you believe pool coins, you shouldn't expect them to serve as a suitable "mixer" on the sole basis they're not an exchange.

I wouldn't need to use it for gambling directly.  I could use it to rebalance funds between wallets that I use for gambling, without paying 2% for a mixer.

Blockchain()com is a non-custodial online wallet; you should search for "custodial wallets" instead.
Interest-paying version requires KYC, you also need to send the funds to your main wallet if you want to send them out so you won't be able to "mix" your coins for obvious reasons.

I can't recommend you any custodial service since most of them have the same policy as Coinbase so you'll like get the same results when you use them for gambling.
Consider using a desktop client like Electrum and use the common privacy measures like never re-use addresses,
you can also send the funds to a couple of different unused addresses before depositing it to Coinbase; or just use a real mixing service.

every centralized exchange, gambling sites,... that control the keys to the address they associate with your "account" does the same exact thing. it only works if the person who are trying to hide from is someone like a friend or regular people who may know your address. otherwise for anyone else, it won't work at all. not to mention that when you use Coinbase your entire activity including your IP addresses, bitcoin addresses, ... are stored and reported/sold to the authorities already.

there is also another case when using such methods where chain analysis could still link the output and input together depending on your behavior and deposit/withdrawal amounts.

No.
Interest paying version isn't an upgrade. It is a lending.
You will borrow your bitcoins to blockchain.com, and they will give you back your bitcoins later with some interest (if they don't break up and run away with your money in the time)

Blockchain.com doesn't do this commingling.  Would it if I upgrade to the interest-paying version?

Mixer, all records will be with the government and will be tax-exclusive. It's the opposite meaning of the currency mixing service.
In addition to that these services are completely centralized, which means that at any moment your account may be frozen for one or no reason.
If you want to use a mixing service, there is a wasabi wallet that provides you with better services than the above methods.

Coinbase is not commingle neither mixing your funds. They control those funds for you, and you don't exactly own that bitcoin, you own just a balance in coinbase database, which may or may not be directly linked to a bitcoin address.

There is a wallet that really mix coins for you, it is https://wasabiwallet.io/ which use uses coinjoin.

It's a custodial service that's why it's "commingling" the user's funds?
Basically any other "custodial" online wallet will do that but there's actually no "Mixing" involved in there,
the service itself still has logs of where your account deposited from and where you withdrew into.

Not to mention the limits and the possibility of locked funds for various reasons like "too high deposit" and red-flagged addresses/transactions.

Coinbase's commingling of user funds is actually useful in terms of preventing non-state adversaries from linking any two transactions sent from the same coinbase wallet.  It's like every transaction goes through a free mixer, but the mixer can be subpoenaed.  I got backed off of coinbase for gambling.  Are there any other online wallets that commingle funds like coinbase does?