Cybercriminals increase the use of crypto mixers

In recent years, as business in the crypto market has increased, scams have also increased. Funds coming out of cybercriminals through crypto mixers are on the rise. Crypto mixers are privacy tools that remove any digital signature associated with a trade and anonymous crypto transactions between two wallets. These tools are increasingly used by scammers to hide information about their crypto exchanges.

Crypto mixers do not ask for Know-Your-Customer (KYC) information, and this makes it easy for scammers to send fraudulent amounts. Chainalysis reports that about 10 percent of all funds sent from illegal addresses were sent to crypto mixers. Crypto funds from high risk exchanges, gambling platforms, decentralized finance and centralized exchanges are also being sent to wallets through crypto mixers. For example, in a typical bitcoin trade, coins are passed from person to person and the transaction is recorded on the blockchain. However, a crypto mixer trades the person sending their holdings to a private pool. The deposited tokens are then mixed with the tokens of other persons and transferred to another person.

When blockchain validators examine these transactions, they will be able to see that bitcoins were sent by one person to a mixer. They can also see that these tokens were passed on to another person but there would be no transaction link between the two persons. The report said that the number of illegal addresses in funds sent to mixers is around 23 percent so far this year. It was 12 percent last year.

Crypto mixers are not actually illegal but they can be brought under legal purview according to the user’s country and the laws in force there. Governments in the US and UK have arrested crypto mixer users and made rules. This has made it difficult for regular traders of the crypto community to use such tools. Crypto exchanges may also provide information on users who use crypto mixers more frequently for transactions.

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