crypto-economy.com
Blockchain analytics firm, Chainalysis, suggests that the amount of cryptocurrencies streaming into crypto mixer services has attained an ‘all-time high’ in 2022 as funds from illegitimate wallets belonging to malicious entities and criminal activity increased multifolds.
The burgeoning crypto space has witnessed cybercriminals look for ways to enhance the pseudo-anonymity of their transactions and launder the cryptoassets from their criminal activities. Of the many ways to launder their black money, these criminals rely on services known as cryptocurrency mixers or cryptocurrency tumblers. These mixers are designed to hide the identity of the sender and receiver of the transaction, providing complete anonimity from authorities.
1/ Mixers are receiving more #crypto than ever in 2022. The 30-day moving avg reached an all-time high of $51.8M worth of crypto on 4/19/22, roughly doubling incoming volumes YoY. Let's break down the increase in mixer usage & where those funds are going. https://t.co/oOIpHaWbYA pic.twitter.com/uOltJ0kHYX
— Chainalysis (@chainalysis) July 14, 2022
How ‘Mixers’ Obfuscate The Money Trail?
According to a report by Chainalysis, crypto mixers are intended to mix the digital money with that of other users in order to make multiple combinations with countless transactions wiping out the source and destination of crypto assets. Post mixing the tokens, each user can withdraw the entire amount deposited, minus a cut for the mixer. Since, the coins come from this jumbled pool, it’s harder for blockchain investigators to track the trail of the money. Chainalysis explained,
“Mixers are designed to provide more privacy in cryptocurrency transactions, but may also be used to obfuscate the source of funds, and, for lack of a better word, “fool” blockchain investigators.”
For instance, Tornado Cash, is a blockchain ethereum mixer that has gained great popularity in recent years, especially among cybercriminals. It is used for processing millions of dollars a day and was used, among others, by the perpetrators of the attack at Crypto.com, involving withdrawals of about $34 million, and by the hackers of the Ronin attack, the blockchain network linked to the Axle Infinity game.
Crypto Mixers Are Not Illegal
5/ Mixer usage is growing. We saw significant quarter-over-quarter increases starting in 2020, and while that growth has leveled off somewhat in 2022, it remains close to all-time highs. pic.twitter.com/dScPiUW0ER
— Chainalysis (@chainalysis) July 14, 2022
The report also claimed that mixers are receiving more cryptocurrency than ever in 2022 with the 30-day moving average reaching an all-time high of $51.8 million worth of digital money on April 19, 2022. These services are available not only in shady forums, but also on the surface web.
Despite their utility for criminals, mixers aren’t illegal by their nature. Although there are many places where such practice is not illegal and this service is available for everybody, the providers offer it as a privacy improvement, rather than a crypto laundering option.
According to the firm, almost 10 per cent of all funds coming from illicit addresses are sent exclusively to crypto mixers. Additionally, data from the second quarter of 2022 shows that funds sent to mixers by illicit addresses come from stolen funds and fraud shops. Chainalysis further added,
“The data shows that mixers currently pose a significant money laundering risk, with 25% of funds coming from illicit addresses, and that cybercriminals associated with hostile governments are taking advantage.”