In what Europol has hailed as the “first law enforcement action of its kind,” officials from the E.U.’s top police agency, in conjunction with authorities and investigators in Luxembourg and the Netherlands, have announced the takedown of a bitcoin mixer service.
The mixer, Bestmixer, worked by tumbling users’ pooled bitcoin in order to preserve participants’ privacy.
The takedown’s coordinating agencies, which declared on May 22nd their seizure of six servers underpinning the platform, launched the enforcement action after determining the mixer had become a popular resource for money launderers.
In an associated press release, Europol noted the mixer had obfuscated thousands of bitcoin while the service was still operational:
“Bestmixer.io was one of the three largest mixing services for cryptocurrencies and offered services for mixing the cryptocurrencies bitcoins, bitcoin cash and litecoins. The service started in May 2018 and achieved a turnover of at least $200 million (approx. 27,000 bitcoins) in a year’s time and guaranteed that the customers would remain anonymous.”
Ironically, the privacy-focused service didn’t avoid bringing attention to itself. Dave Jevans, chief executive officer of blockchain investigative firm CipherTrace, has since noted that mixer’s operators openly marketed the platform to money launderers. On the news, Jevans said:
“Bestmixer has blatantly advertised money laundering services, and falsely claimed to be domiciled in Curacao where they claimed it was a legal service. The reality is that they were operating in Europe and services customers from many countries around the world.”
Accordingly, Bestmixer was a rather flagrant bad actor, and the episode has brought cryptocurrency mixers back into the fore once more. Some prominent bitcoiners have pushed back against demonizing mixers in general, arguing that many users of the services simply want to protect their privacy rather than hide crimes.
Coinjoin is fundamentally different – both from legal and enforcement perspectives – than a centralized custodial mixing service, which advertised itself directly to criminals as a laundering service.
Privacy isn't illegal. Using bitcoin privately doesn't make you a criminal. pic.twitter.com/4S3CWipLxR
— Matt Odell (@matt_odell) May 22, 2019
BestMixer Previously Posed a “Crypto Dusting” Problem
BestMixer’s bust isn’t the first time the service has garnered unflattering headlines in the cryptoverse.
Last fall, the mixer’s operators temporarily sent out small transactions en masse to select bitcoin addresses. The purpose? To generate interest in the platform from potential new users.
The problem with such a marketing maneuver is that it tainted users’ BTC addresses without their consent. That’s because cryptocurrency exchanges’ anti-money laundering (AML) systems typically monitor for transactions facilitated by mixers. That means the affected addresses may be at risk of facing de facto blacklistings.
As CipherTrace noted at the time in a post-mortem report, this kind of crypto dusting may be used in the future to intentionally spike users’ addresses:
“As time progresses in the world, this form of spam may soon become a primary technique for bad actors to spread taint and contaminate legitimate users in massive dusting campaigns.”
However, in light of Europol’s new enforcement action, it’s clear that BestMixer won’t be responsible for any more crypto dusting going forward.
Of Course, Mixers Aren’t Just for Criminals
In the cryptoeconomy, there is genuine demand for mixer services from users who want their main wallets to be usable but not publicly known.
That reality revealed itself in the Ethereum ecosystem on Wednesday, as Gnosis team member and Into the Ether host Eric Conner called for the creation of a “basic mixing service” for Ethereum that would boost the privacy of the blockchain project’s users.
Ethereum needs a basic mixing service that can be seamlessly integrated into wallets for privacy. I'm so tired of having to be cautious about sending txs to people.
I'm going to embark on trying to make this happen.
— Eric Conner (@econoar) May 22, 2019
Notably, within mere minutes of Conner’s call to action, Ethereum co-creator Vitalik Buterin had published a minimal design spec for such a mixer.
— Mihailo Bjelic (@MihailoBjelic) May 22, 2019
The concept quickly gained traction. Before long, SpankChain chief executive officer and MolochDAO creator Ameen Soleimani had floated the idea of launching a MolochDAO proposal to fund the creation of Buterin’s mixer design.
We need a privacy champion!
Please RT! https://t.co/iMGnZAdk9g
— Darth Meme (@ameensol) May 22, 2019
As such, Conner’s proposed “basic mixing service” may be coming sooner rather than later.
The post European Authorities Launch Unprecedented Takedown of Bitcoin Mixer appeared first on Blockonomi.