Cryptocurrency mixers: help for hackers or desire for freedom

Cryptocurrency mixing services have become an integral part of the crypto world, helping to maintain confidentiality and go unnoticed by both hackers and ordinary users. In this article, we will tell you more about mixers, explain how they work, and analyze the situation with Tornado Cash.

What is it?

A cryptocurrency mixer is a service that allows users to mix their digital assets with other users' tokens and maintain confidentiality. After transferring funds through the mixer, no one will ever know where they came from or who made the transaction (the service hides the connection between the sender and the recipient) — everything is as anonymous as possible.

What is the world’s attitude towards mixers?

• Users who want to keep their privacy are positive, because their crypto transactions will never be traced. For example, Ethereum co-founder Vitalik Buterin used the Tornado Cash mixer to help Ukraine — Buterin sent donations for Ukrainians in digital assets. The Ethereum co-founder took this step because he did not want the Russian government to have information about the transferred funds and to track Buterin’s actions.
• Representatives of governments and law enforcement agencies have a negative attitude, considering mixing services to be money laundering tools. For example, North Korean hackers from the Lazarus Group used Tornado Сash and ChipMixer mixers to launder stolen funds.
• Hackers who received a convenient mechanism for transferring and appropriating stolen funds are positive. Thus, 23% of digital assets sent to mixers were obtained illegally, while in 2021 this figure was 12%. The privacy of cryptocurrency mixing services makes them «attractive» to fraudsters (most servers never require KYC).

What happened to the most famous mixer Tornado Cash?

Tornado Cash has become the most popular money laundering tool among hackers, with billions of dollars on the conscience and accounts of criminals that cannot be recovered. To fight hackers, the US government decided to ban the cryptocurrency mixer. Thus, on August 8, the United States imposed sanctions prohibiting American citizens and businesses from using Tornado Cash services. Following the introduction of such bans, crypto platforms began blocking addresses associated with the mixer.

A few days after the sanctions were imposed, Tornado Cash developer Alexey Pertsev was detained in Amsterdam and immediately brought to court, facing charges of laundering stolen cryptocurrencies and collaborating with criminals. It’s worth noting that Pertsev has only created a tool that works well, and it’s up to the users to use it. Therefore, it is obvious that he should not be held responsible for the actions of hackers.

Members of the cryptocurrency community have come to the defense of the arrested Tornado Cash developer, as users believe that Pertsev is a victim of US political repression. «This is like saying that the inventor of the knife is guilty of murder. This is absurd,» said one of the participants of the rally in support of Pertsev. Representatives of the Coin Center legal center also disagreed with the decision of the US Department of Justice, stating that OFAC violated the constitutional right of Americans and «crossed all borders.»

Interestingly, both Vitalik Buterin, co-founder of the Ethereum cryptocurrency, and Charles Hoskinson, founder of the Cardano cryptocurrency, defended the Tornado Cash developer. Thus, the father of Cardano believes that the US government, which has imposed sanctions on Tornado Cash and is demanding the extradition of its developer, is setting a dangerous regulatory precedent.

«The protocol as understood by developers is that when we write code, it is an expression of opinion. As long as we are not involved in running and using this code for a specific purpose, we are just writing it, it’s like writing a book. So, for example, you can write a book that says: „Here's how you make cyanide“ [або] „Here's how you design a bomb“ or things like that. Mostly it’s just words. But you don’t tell people to go and do it,» Charles Hoskinson explained.