Why Are Bitcoin Mixers Legal?
Tornado Cash is the perfect name for a cryptocurrency mixer, or what’s also known as a tumbler. What does a mixer do? It digitally stirs, for example, a customer’s Bitcoins with a slew of other Bitcoins, kind of like a tornado in a trailer park. During the mixing process the user’s Bitcoin funds are scattered across potentially thousands of users. What they receive in return is clean. This is all conducted legally, because as of this writing the use of crypto mixers remains legal.
How is that possible, you ask? Chock it up to one more wild west moment in the potentially short, but exciting life of decentralization? Industry proponents argue that digital currency mixers serve an important function in the decentralized world by helping its crypto investors maintain their privacy. Kim Grauer, director of research at Chainalysis stated in an interview with Fortune magazine that mixers are, “not inherently illegal — they can be used for legitimate privacy purposes.”
Emphasis on the word can. This stance is kind of noble, but at the same time almost purposely naive in a PR sort of fashion. It is so purposely naive it gives crypto proponents some plausible deniability of the crimes taking place on these platforms. It also serves as a nice alibi for money launderers, purposeful or not. Denial is a powerful emotion. Just consider the growth of money laundering cases involving mixers listed below, and then tell me whether or not there is any industry denial going on:
January 17, 2022: Crypto.com’s Stolen Ether Being Mixed Through Tornado Cash
April 5, 2022: Justice Department Investigation Leads to Shutdown of Largest Online Darknet Marketplace [ref., Hydra mixing services]
In the case of the Crypto.com, over $30 million worth of crypto was stolen from the cryptocurrency exchange. As you can read from the headline above the stolen Ether funds are reportedly being laundered through the crypto mixer I lead this story off with — Tornado Cash. The following Coindesk video explains this unique public laundering taking place, in-depth.
CEO of the Alacer Group. Sharing the latest news in financial crimes and best practices that enable financial institutions to prevent money laundering.