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Largest Bitcoin mixer, Bitmixer.io, closes down (bitcointalk.org)
192 points by djoldman on July 24, 2017 | hide | past | favorite | 227 comments

He probably made so much money that he said "Hey, why risk it by continuing to run this business when I may someday face jail time. I know I am aiding criminals". Smart move to shut it down on your terms and look like a good guy rather than to continue profiting from criminal activity. Whatever your on opinion the various issues at play here there is absolutely no doubt that running this sort of service is extremely risky from a legal / political standpoint.

I wonder if the shutdowns last week played any his decision? Maybe he saw a large drop in volumes after the darknet markets were shut down and realized those use cases were much larger than he imagined.

It's really harmful to the cause of privacy when people equate enablement of privacy with criminality, as you're doing.

You can't even sell gift certificates on the Internet without having built a business that will probably have criminals as a plurality constituency. The idea that a Bitcoin mixer was most used for legitimate purposes is pretty hard to swallow.

As a positive claim, rather than a normative one, it has to be possible to observe that services like this have their great practical impact on criminals. Making such a positive claim can't "hurt the cause of privacy". If the cause of privacy wants to be taken seriously, it will need to grow up and stop demanding that people accept false sets of facts.

At least it doesn't have as bad ratio of criminal vs legal use as email services. A email address normally receive several scams, spam, and hacking attempts for each legit email, and its only thanks to client side filters that the illegitimate use case of email don't overwhelm the legitimate.

Would you say that the industry that use bitcoin mixers is bigger and involve more illicit money than the spam/scam/malware industry that use email?

Because for email the benefit for legitimate user is greater than the benefit for the spammer/scammer/malware emails. Whereas for bitcoin mixers the benefit to legitimate users is smaller than the benefit to the thief/scammer.

I see this kind of argument/counter argument popping up from such different topics such as cashless society, tor, BitTorrent, cryptography bans and so on.

To have a honest discussion, how would we measure the benefits and drawbacks of a bitcoin mixers? One way to measure the drawbacks is to look at how much money is involved in the by criminals, but I suspect that the collective of criminals that use email to conduct crime is bigger and involve much more money than those that use bitcoin mixers, so it seems we need to also measure the benefits. How would we do that? Redirecting the question to researchers and have them conduct anonymous surveys of legitimate users of such service?

If you run an online store that doesn't validate credit cards correctly you will become an API for fraudsters to check the validity of Visa numbers.

What is the proper way to validate credit cards?

There's no good way. You have to use heuristics. CC companies won't help you.


This is pretty much why I think credit cards are unfairly one-sided, and is a big advantage to crypto-currencies like bitcoin. CC are as easy as possible for the consumer, but it's up to the business to guess if the consumer is authorized to use it, and there's no good way to be sure. Some people are going to be unfairly shafted. Oh and credit card networks can do things like shut off access to WikiLeaks if the US government asks them to. The system mostly works for most people in western countries - but it is very flawed.

MaxMind's minFraud[0] was the most popular last time I checked. You give them the credit card info, the IP of the user, their email etc[1] and $0.005 (per credit card transaction you want them to check) and they tell you the probability that it's fraud.

At my company we use Stripe as our payment processor, which has their own fraud detection called Radar. But still, a bit under .1% of our transactions are fraudulent.

Credit card fraud is honestly a great business, even if they know you're doing it, the police wont do anything, and the merchant has to cover the cost and pay $15 for the privilege of being defrauded.

[0] https://www.maxmind.com/en/minfraud-services

[1] https://minfraud.readthedocs.io/en/latest/

Sorta related, turns out there are anti-fraud services for fraudsters https://krebsonsecurity.com/2013/11/anti-fraud-service-for-f...

isn't this the kind of service that will flag a legitimate user behind a VPN as a potential threat because his ip has been used in multiple transactions? Should a user switch off his VPN to do shopping?

If that VPN IP range is known to be used by fraudsters then yes, for good reasons. And if your VPN is affordable and "privacy oriented" there is a very good chance that a bunch of crooks are going to use it.

Professional VPNs are probably fine.

> What is the proper way to validate credit cards? A) If you are asking that question, you really should use something like https://stripe.com/radar

But assuming you don't want to:

1) Validate against the standard checksum formulas (this catches legit typos)

1b) https://en.wikipedia.org/wiki/Luhn_algorithm

1c) Regardless of what happens next, send an order confirmation and play dead.

1d) If it fails any of the following steps, send a politely worded "issue with the order" e-mail and to contact you (after 24 hours). Use a reason that sounds generic rather than credit card specific.

2) Check GeoIP and compare against potentially geographic space. (this catches VPNs, etc. For instance, shipping to a US freight forwarder from a Russian IP is likely highly probably fraud. The customer can call/e-mail you if they get caught in this.)

2b) Services like https://www.maxmind.com/en/minfraud-services qualify for this.

3) Check address locations against known US freight forwarders / PO boxes / UPS Stores / etc. Force additional customer verification, like for IP addresses.

4) To validate repeat card usage, fingerprint cards that were successfully charged and you didn't receive a chargeback after the window closes:


You can use Stripe/Braintree tokens or your own implementation.

5) If it fails step 4:

5a) Run whatever business heuristics/signals that might be true for your customer base. Too specific to get into really.

5b) Actually charge the card and see what happens. If its declined by the credit card company, send the generic contact e-mail.

If you have a brick and mortar business, probably nothing. If you are selling on the internet, and, probably put a step between you and an old school credit card processor that will do that checking for you, professionally. There's just way too much money in credit card fraud to have anything that even resembles good online protection as a small business.

Some fancy online card processors will do this for you automatically. Otherwise, there's companies that do this logic for you, and work across processors.

Ultimately, we should all get out of the business of transferring money by just entering credit card numbers, which are easy t copy. Many parts of the world are already moving to systems that require 2fa, and fraud rates drop like a rock. Good luck convincing US banks and online retailers to change everything to do this though.

Yeah, where I'm from (Belgium) 2fa is the industry standard by now, and fraud cases were reduced immensely when a previous employer of mine made the switch several years ago. But like you mentioned, this is not just up to devs in most cases...

How does 2fa work in practice for credit card payments?

Both my Danish and British accounts send an SMS for some purchases, usually only larger ones. I have to type it into a box on a form.

They used to use a password, but that risks people putting their bank password into some dodgy shopping site.

VISA's implementation: https://www.visaeurope.com/making-payments/verified-by-visa/

Bit of a late reply but almost all companies use something called a digipass, you insert your card and input a challenge code and your pin. https://i.imgur.com/10OChcv.jpg

Write risk algorithms that return false negatives to the suspected carders in your logic, before you proxy card data to the processor. If you don't, you will soon hit 1% chargeback threshold and your account will suffer.

To just validate the numbers themselves, you can use https://en.wikipedia.org/wiki/Luhn_algorithm

Beyond that, I'm not sure what that person is talking about.

FYI that's not enough. That may act as a form validation, but does not verify that the card is active and able to be used. Anyone can run the Luhn against a card # - but thieves have known CC numbers and want to verify they can be used. As a merchant you have to be somewhat on top of your orders and cancel any "suspicious" ones to prevent chargebacks.

Well aware, thanks. I only ever stated that the Luhn algorithm would validate just the numbers.

> you will become an API for fraudsters to check the validity of Visa numbers.

Anyone accepting donations via PayPal

It's PayPal that needs to check that stuff then. And even then fraud can occur to one's service.

Except they refuse to. So you see a constant stream of $0.01 to $0.03 donations. You have to manually refund every one of them out of your own PayPal balance or you get hit with a $25 chargeback fee.

>You can't even sell gift certificates on the Internet without having built a business that will probably have criminals as a plurality constituency.

This is not correct, in my experience - largest constituency for many gift cards is merchandise resellers. I myself have purchased in the mid 5 figure range of gift cards and I've met people who've spent in the 7 figure range.

How do you know anything about other buyers just because you buy a lot?

I know large gc sellers and I've sold a decent amount myself. I know the gross margins some of the exchanges run on, and the fraud rate is low.

Is it a plurality of users, not volume? Does the average criminal sell a fraction of the amount a top seller does?

There's a community of small time sellers. I don't believe the overall fraud rate is that significant.

Shameless plug, but one of my old college friends sells gift cards at scale: https://support.priceyak.com/hc/en-us/articles/203465699-Buy...

If you're in the Amazon world I'm sure you know of them, but if not I'd be happy to put you in touch (contact info in profile)

Yes, I've used PY.

For volume gift cards, it's all about the discount. There's no way I would buy gc at no discount and have to pay cash, as PY offers last I checked.

Couldn't you say exactly the same thing for encryption in the early days of the Internet? Heck, governments are still doing that today, even though the benefits for "honest businesses" are obvious.

Encryption for purchase forms on the Internet made a lot of sense even in the early days - a lot of early Internet businesses were genuinely worried that people wouldn't be willing to send their credit card information over the Internet.

Just because some technology has bad uses as well as good uses doesn't mean that technology shouldn't exist.

If it ceases to exist, the good uses disappear too.

Just imagine selling weapons would be legal! Crazy!

>The idea that a Bitcoin mixer was most used for legitimate purposes is pretty hard to swallow.

Indeed it is. Could you please elaborate?

It's also really disingenuous to deny that criminals benefit from privacy tools. We can acknowledge that criminals benefit and are, perhaps, the largest "customer" of privacy tools without invalidating the argument that those tools should exist and be legal. Not being realistic about it is also harmful to the privacy cause.

His comment isn't equating privacy and criminality, it's acknowledging that some, if not a majority, of the profits of his service came through being an enabler to criminal activity. He's being realistic on the subject, you're the one who isn't.

Where do you draw the line?

One terrorist attack that was enabled by Signal? Should Signal then be destroyed?

Draw the line and we can debate that.

I don't know that there's one universally right "line" that can be drawn. Everyone has their personal line. For me, my personal line is to never compromise who I am, no matter the cost. I'd love it if my country were the same. If I die in a terrorist attack that could have been prevented through illegal surveillance, I'm okay with that (the dying, not the surveillance.) Law enforcement should do its best to prevent attacks within the framework of our laws and our values. Attacks that get through are not necessarily a failure in our intelligence or law enforcement personnel or processes. Some amount of failure is not only acceptable, it's also to be expected.

We, as citizens, need to do our part to keep perspective in the wake of attacks. Yes, they're scary, but they're rare and we should be able to endure them without getting hysterical. But I agree with our founders that we have certain inalienable rights that don't go away just because someone might be a criminal. And while privacy isn't explicitly enshrined in our bill of rights, it's completely within the spirit of that document. Aviation engineers don't try to get the coefficient of gravity changed. It's an immutable constant that's part of the framework in which they do their work. Privacy should, likewise, be an immutable constant that's part of the framework in which law enforcement tries to prevent and solve crime.

I fail to see how being murdered in a terrorist attack, or indeed in any other fashion, cannot be said to curtail the exercise of those rights the Declaration characterizes as inalienable, and indeed the exercise of any other rights we may care to consider likewise.

There are no immutable constants, gravitational or otherwise, in the world of human ideas. If you want me to agree with you that it's preferable to die than to be noninvasively and incidentally spied upon, it helps that cause not at all simply to say the truth of your perspective on the matter is as ineluctable as gravitation - this rather fails to convince.

Terrorism happens outside the constructs of our society. If it were government death squads going around killing people, you'd have a point. And if it weren't our government doing the spying, there'd be no point in expecting them to adhere to our principles. The discussion is about deciding what type of society we want to be and adhering to our own rules. That someone outside of our society chooses to break those rules doesn't create a license for us to do the same.

We don't win by compromising ourselves and fighting at their level. We win by being true to ourselves and being strong in the face of adversity. The more we can be ourselves, the stronger we'll be.

But what constitutes our desired selves is exactly the discussion. That's the "line" that I was asked to draw and I absolutely drew it for myself and I made that clear. I wasn't arguing that privacy is an immutable construct, I was arguing that law enforcement should view it as such because I feel it's fundamental to our value system. You don't see an aviation engineer arguing that gravity shouldn't exist just to make his job easier. He or she embraces that constraint and adapts as best as possible. Similarly, I'd like law enforcement to just embrace that privacy is an expectation in a free country and work within that reality. Others are free to disagree with me about the true nature of our desired society. For them, privacy may not be an hard and fast requirement. For me it is. That's my line.

> That someone outside of our society chooses to break those rules doesn't create a license for us to do the same.

Perhaps it creates a necessity. Dying to uphold a principle is fine and good, and very much easier when you get to have the principle and someone else has to do the dying.

>noninvasively and incidentally spied upon,

Noninvasively spied upon? Having your privacy violated is invasive, by definition. Having a situation where one centre of power has extensive information on the private details of practically the entire population is an extremely dangerous situation, because knowledge is power, and that level of asymmetry in knowledge can (and I would argue will) lead to the population at large being exploited by those within this centre of power.

Strange - I don't feel invaded.

Ignorance is bliss as they say.

You went full straw man real quick. Where in this chain is anyone advocating shutting anything down by force?

And how did we go from dealing drugs to terrorism? Time out dude, time out.

It's an analogy.

Remove your objection of force here to stay on topic.

A quote:

> if not a majority, of the profits of his service came through being an enabler to criminal activity. He's being realistic on the subject

In the same way Signal would be an enabler of terrorism.

Let's call both equivalent. Crime = crime.

Is encryption (or even the concept of privacy) then unethical because some benefit from it wrongly?

Bottomline: Just because we realize that people commit crime with tools not intended for crime should we then outlaw those tools?

To just repeat what others have said: nobody is advocating outlawing those tools.

To add something: When you're running such a service and care about the right to privacy, you should try to minimise its use for illegal purposes whenever possible.

It's quite counterproductive to glorify that criminal activity as some sort of heroic effort in defence of privacy rights, and gloating about it with a sort of haha-cant-stop-the-terrorist-inyourface. Because, yes, if your privacy tool becomes useful enough for that clientele to cause significant harm, people will start supporting its ban.

I wouldn't call asking you to clarify your position going strawman.

I would, when the question makes unjustified presumptions about the person's position.

GP asked "where do you draw the line?" to a person who didn't make any normative claim at all.

I'll go with Blackstone's ratio. I suspect that more than 1/11 of the use of Signal is legitimate, but more than 10/11 of the use of Bitcoin mixers is for crime.

Worth a plug for the GNU Taler project, which I have very high hopes for:


But it is true that enablement of privacy enables criminality. Use by criminals is a valid argument against privacy!

However, strong and valid arguments against privacy don't make privacy not worth fighting for if you believe there are stronger arguments for it. I do. I assume you do based on your stance.

The world isn't black and white, so suggesting people shouldn't surface valid arguments (on either side of any issue) is more harmful in the long run. We need all the valid arguments, from as many people as possible, that we might make informed decisions on these important issues.

While true, the fact remains that privacy and criminality go hand in hand in this context. And i'd say it's more dangerous for people to censor the truth (that 99% of his users were criminals) for fear of how it may be wrongly construed.

I feel that it is improper for you to make such an unsubstantiated claim.

You can state an /opinion/, such as: "I believe the majority of that site's users were probably criminals."

You're right. But the owner himself believes the substantial function of his service has been to support criminality, and that's why he's shutting it down.

Let's be reasonable and word it as "A sizable portion of the service was supporting criminality."

One could say the same about credit/debit cards, with a suitable definition of "criminality". Charging of interest is illegal under Sharia. Porn and gambling are illegal in some jurisdictions. And so on.

Edit: My point is that "criminality" is a meaningless concept without context. Also, it lumps too many things that are clearly distinguishable.

And Amish do not use technology. You are free to get off the site now to not commit a sin in their eyes.

People mentioned here are criminals by any reasonable definition of the word: illegal drugs, weapons, ordering hitmen, identity thefts, cc frauds, etc. The linked thread outright mentions few of these as the reason for closure. This isn't some moral dilemma.

Look at it this way, almost no bitcoin mixers' users will ever be prosecuted to be called criminals and yet you do call them criminals for no reason.

I don't believe there could even be much legitimate use of bitcoin without mixers, people won't be willing to disclose that much information about themselves to everyone in the world.

Are you making an argument for or against Bitcoin now? What you basically said is: people who deal in illegal goods using Bitcoin are not criminals because they will never be caught thanks to Bitcoin and mixers.

Bitmixer.io guy/girl and others over there call them criminals and say they do illegal things (i.e.: weapons and drugs) using Bitcoin and mixers. Your distinction is really a moot point and being so pedantic serves no one and just looks stupid.

You and others are claiming they are criminals, even though they were never prosecuted. People who use those services are not uncaught criminals, this is just government propaganda, they are legitimate users.

It's just like with Tor, government agencies want you to believe that it is used mostly for "criminals", but it isn't.

Yes, people committing crimes like buying illegal weapons and drugs ARE criminals. Why are you claiming otherwise? Buying illegal goods safely is a legitimate use of bitcoin to you? No one at any point here said EVERYONE using bitcoin and tor are criminals or buying illegal goods.

I fell to government propaganda? Which government's? American? Mine? I dislike both. Did the owner of Bitmixer fall to government propaganda too? They could see what their service was used for and decided there was too much sketchy stuff.

I support vpn, tor, bitcoin, etc. on principle but I have no idea (and it doesn't change my level of support no matter what the answer is) how much of it is used for legal or illegal but moral (China, dictatorships, etc.) stuff and how much for just crime (guns, drugs, hitmen, fraud, etc.) and I'm pretty sure you don't either.

Perhaps you fell to Kool Aid instead and are blind to all the abuse these enabled too?

< Yes, people committing crimes like buying illegal weapons and drugs ARE criminals.

A crime is a crime only if some authority says that it's a crime. Why should everyone on the Internet be subject to US law (and law of subservient US client states)? There is no law on the Internet except for the raw exercise of skill and power. Consider the NSA, for example. Or the Russians. Or Google and Facebook, for that matter.

There's a revolution going on. Freedom is coming, perhaps. Or failure and subjugation, if the kleptocrats win. Time will tell.

Crimes don't work like that. The government must prove there was a crime committed by someone to call that someone a criminal, otherwise it's not a crime. And I'm pretty sure this is the case almost everywhere in the world.

As for why people use tor - you can monitor tor metrics and read news from the countries where you see growth, you'll notice that most users come to tor just to circumvent censorship.

That logic is so dumb I'm at a loss for words.

A crime is a crime, no matter the status of its perpetrator, there are lists of "unsolved crimes" where the criminal(s) responsible are still at large and/or unknown.

As for saying so-and-so by name being criminal, that might be slander if they weren't convicted but saying "people who commit crimes are criminals" is absolutely correct and always true, by definition of these words.

Why would there be a phrase "convicted criminal" if it was a tautology and "criminal" itself included the need for conviction in its definition?

Crimes become crimes only when perpetrator is caught and convicted? You can't call clearly illegal things like buying firearms with erased serial numbers or ordering weed and cocaine crimes just because the person doing it did not the caught (yet)?

Do you really think someone does not become a criminal the moment they order a kilo of crack, only the moment they get convicted?

If someone was clearly murdered would you also say they weren't actually murdered until the murderer himself is caught and convicted too? Murder is a crime after all and crime only is confirmed when the criminal is convicted, not when it happens. Can you trample all around the body or is it called a "crime scene" and restricted by the police the moment the prematurely dead body is found?

You are ridiculous, exactly the kind of nutjob (even pulling the "government propaganda" cards on me and the owners of bitmixer for calling drug traffickers criminals) people associated with privacy tools and the kind governments can point at to discredit these tools in people's eyes.

> The government must prove there was a crime committed by someone to call that someone a criminal, otherwise it's not a crime.

Not only that. The government must establish jurisdiction, or obtain the cooperation of whatever government has jurisdiction.

> You and others are claiming they are criminals, ...

Indeed, they are.

> ... even though they were never prosecuted. ...

Moreover, even though jurisdiction was never properly established. And even if relevant laws are morally repugnant, and enacted by kleptocrats abusing their power.

> People who use those services are not uncaught criminals, this is just government propaganda, ...

Worse than propaganda, it's unprovoked aggression, by the powerful against the weak.

> they are legitimate users.

Most of them are, I believe.

My point is that there is no fundamental reason why Internet users are subject to US/EU law any more than they're subject to Sharia, Amish law, Saudi law, Chinese law, North Korean law, etc. Except that the US has the power to make it so.

If Internet users have the power to make their own law, their definition of criminality will be as "reasonable" as any other.

Edit: Amish users have the right to forgo Internet use. US/EU users have the right to forgo drugs and porn illegal under US/EU law. Same for Saudi users and Saudi law. But no one government has the right to rule the Internet.

The illegal weapons and drugs are not produced and consumed on the internet but in one of the countries where they (or the process of obtaining them via the internet instead of a government authorized seller) are highly illegal.

In vast majority of countries even possession of drugs is illegal. Drugs trafficking and owning large quantities is usually illegal even in countries where possession for personal use is legal.

Weapons are even worse because of how liberal USA gun laws are compared to the rest of the world. There are many countries where the process to get a gun is much harder and full of bureaucracy and requires registering with the police.

Do you seriously want to make an argument that all of these guns and drugs are all Portuguese and Czechs buying 1g of coke or 10g of weed at a time, Swiss and Americans buying guns that are legal in their countries, registered with the police, etc.?

Don't be ridiculous. Tor and Bitcoin are used by criminals and it's not a coincidence.

And then there is the morality argument. Bitmixer owners felt their service was used by criminals (their words) and it left such a bad taste in their mouth that they shut it down on their own, there was no legal system involved. I can get behind that choice if that is really their reason. It's not like being an asshole is illegal but many (most) people still hate assholes and won't help them in any way. Just because something is legal (and again - drugs and weapons usually aren't) doesn't mean it should be done, applauded and enabled by convenient websites.

Very true. Additionally, it's harmful to the cause of morality to equate illegality with immorality (as the term 'criminality' seems to imply).

It's like "a criminal" is a truly dystopian term. An attempt to equate a bad guy with the guy the government prosecutes or even merely wants to prosecute.

I agree. I'm not trying to make that equivalence, but that sentiment is so prevalent that it has to factor into your risk assessment as a developer. If you are in this situation and are confident nothing is going to happen to you, you haven't been paying enough attention.

Thanks for the clarification. I agree that the decision made by the operator will likely to prove to be a wise one from a self-perservation pov.

>It's really harmful to the cause of privacy when people equate enablement of privacy with criminality, as you're doing.

It is criminality in this case. It's called money laundering. Like it or not, it has been illegal since money has existed for very good reasons.

The point of Cryptocurrency is not to enable anonymous money laundering by criminals. It is in fact the exact opposite: to shine light on the entire system, as the OP stated.

FWIW I would use Bitcoin mixers in the interest of privacy on a regular basis. People vastly overestimate the "anonymity" of bitcoin; it is, in fact, riskier than other transmission methods because the transaction is irrevocably and publicly logged on the blockchain forever.

It would probably not be hard for an interested party to piece together a good deal of an individual's transaction history given a couple of known btc addresses, especially if they don't follow the practice of generating a new address for every transaction (e.g., they, or one of their transaction partners, is a site that says "Send btc to this address to donate/buy/whatever").

And that's without law enforcement powers. Imagine what would happen if the fuzz link an address a few levels up the chain to a drug transaction. How long can bitcoin remain "dirty" and subject to confiscation as proceeds from illegal conduct? I don't really want to be a test case for that.

When I use a credit card, I know that my bank and the vendor have those records, but I also know that a random person is very unlikely to be able to get to them. In that sense, bitcoin is much less private than your ordinary centralized transaction methods; at least in that case, you have some idea who is able to review your records.

Thus, it is a good idea to "mix" coins, IMO. Third-party mixers are useful because the blockchain also contains metadata about each transaction, including the IP address of the node that relayed the tx, timestamps, etc. and it takes a lot of manual effort to get enough steps away that it's not obviously just sending money back and forth to yourself (less some network tx fees each time). It's hard to self-mix well.

I'd like mining pools to offer sale of coinbase bitcoins for people who truly value their privacy. I would buy a 12.5 BTC coinbase transaction for maybe up to 13 BTC. That makes the pool's effective block reward 13 rather than 12.5 BTC. More reward means more users so the pool would get bigger, mine blocks more frequently, more profit from coinbase sales. I honestly don't see a downside.

NB. When I say 'coinbase' I mean coin generation from mining reward. Not the company. (I hate that they deliberately chose a name to confuse new users)

I can see that being of interest to a significant number of people - might the mining pools be wary of being associated with the same 'bad things' as mixing services though?

It's good to be made aware of the term, I've surely seen it mentioned before and read it as the company.

> Imagine what would happen if the fuzz link an address a few levels up the chain to a drug transaction. How long can bitcoin remain "dirty" and subject to confiscation as proceeds from illegal conduct? I don't really want to be a test case for that.

How does deliberately mixing your coins with the proceeds of illegal conduct help that situation at all? I don't think the government will consider mixing to be a magical crime eraser. Mixers will be the test case.

Money laundering is just a "make my life easier" card for prosecutors. By itself, it is not harmful at all. Maybe tax evasion is harmful, but don't conflate the two. It's disgusting that we've let people get away with promoting this idea of hiding your money, seeking privacy, is somehow wrong.

This was on HN a while ago: https://www.americanbanker.com/opinion/money-laundering-is-f...

As far as this being the "point" of cryptocurrency, it's rather silly to suggest the point is to massively increase traceability in transactions. Maybe that's just a limitation of Bitcoin.

>As far as this being the "point" of cryptocurrency, it's rather silly to suggest the point is to massively increase traceability in transactions. Maybe that's just a limitation of Bitcoin.

But isn't a verifiable ledger of public transactions a valuable thing in and of itself? I believe the original intent of Bitcoin was to also help facilitate things like land deed transfers. A blockchain could easily replace all the of the "legals" sections in newspapers.

There is no point to cryptocurrency beyond the mechanics of the technology that powers it, and the constraints imposed by it. To ascribe some nobler point or ideal—which is impossible to coerce through the technology alone—is to naively expect something from cryptocurrency that you will never get.

If you want a currency technology and platform that constrains activities to morally benevolent activities, it must either be heavily regulated (traditional systems) or designed and implemented as such (no such system yet exists).

The act of using a mixer alone is not money laundering.

Nor is using a laundry machine, but it may be suspicious when using it with a large number of bills.

Wow, talk about moving the goal posts. We have gone from "it is criminality" to "may be suspicious" in just two posts.

> it has been illegal since money has existed for very good reasons.

Neither of these claims are true.

"Money laundering" as it is understood today only emerged in the 1980s during the war on drugs.

It's a crime because it's easier to prove and prosecute than any actual crime that might be facilitated by anonymizing money, like tax evasion. I'm not sure if that's a good reason, although it is a practical one. It's kind of like making encryption illegal because people might use it to break copyright law. The use of encryption isn't the actual crime, but it's easier to prosecute.

>"Money laundering" as it is understood today only emerged in the 1980s during the war on drugs.

Nonsense. From wiki: "The term "money laundering" is said to have originated with the Italian mafia and such criminals as Al Capone who allegedly purchased 'Laundromats' to commingle (or mix) their illegal profits from prostitution and bootlegged liquor sales with legitimate business sales"

But furthermore I don't think it needs to be argued that people have been hiding money from governments since there has been money and governments. It will always be an implicitly illegal act regardless of the existence of specific statute because you are in the end avoiding taxation.

You don't launder to avoid taxation, you launder to provide a plausible legitimate excuse for your criminal income, usually paying taxes in the process.

It's usually highly illegal because it involves falsifying records, including those filed with tax authorities (and because the purpose of that falsification is to conceal another crime.)

I'm not following. Are you saying that laundromats have existed as long as money has? And what does "implicitly illegal" mean? Are you from a country normally described as free?

In many peoples' reasoned opinions, the "illegality" of prostitution and alcohol sales is up for debate (laws not withstanding). Heck, even past American presidents skirted the laws for the latter -- and probably didn't pay taxes on booze sales either.

EDIT: My point (to the downvoters) is that not all "illegal" activities are immoral, and that reasoned people could legitimately consider willfully defying & hiding their defiance as an act of freedom. Case in point: Tea in 1773.

Ehhh... this case I think it's fair to suggest that a mixer could be used for criminality, and that might be too much of an risk for an operator. The OP is not equating the too, just pointing out that one of the two is enough to add significant risk.

I'm having trouble understanding this...

Could you help me think of an example where this type of privacy is useful, for non criminal reasons?

Imagine a world where the street taco vendor that accepted your money gets you bank transaction history since you opened the account. That's bitcoin. Privacy is important because wallet anonymity is really the only privacy you have, and once it's gone there's no getting it back, and it's retroactive. Mixing services add a buffer.

This is a great point not understood by many. Bitcoin keeps a history of all transactions. If you identify yourself during a transaction your history is exposed. Mixing services help.

Except that's mitigated with a HD wallet, unless you're reusing addresses.

Thank you. That is exactly the type of response I was hoping for.

A really good article on privacy in general that needs to be read by everyone:


But regarding cryptocurrencies specifically:

Imagine an organization in one of the 74 countries where simply being homosexual is still illegal (http://www.independent.co.uk/news/world/gay-lesbian-bisexual...) that tries to save them from being prosecuted by the government.

This may require some anonymous cash.

Not all laws are equally just across time and space. The right to meet in secret and conduct transactions in secret aids transitions.

It's ironic that your argument against associating privacy with criminality is citing an example where privacy is seen as morally necessary specifically because the acts one wishes to support have been criminalized.

It seems to me your problem is more with the association between criminality and moral wrongdoing than that between privacy and criminality.

Who is going to be the perfectly moral individual or organization who will be able to fairly distinguish between that which is moral but illegal and that which is immoral and illegal? The answer of course is that no such entity exists nor will exist. And you cannot stop the latter entirely without also halting the former, and halting the former is arguably worse (but that's debatable, especially if your opening argument is "Let's take mass child slave trafficking.")

Non-private transactions leak your entire transaction graph to the world. There are a plethora of reasons, many of them rooted in avoiding becoming a victim of crime, one would prefer their transactions be private.

Or you could just use a traditional payment method that doesn't, by default, leak your entire transaction graph to the world.

Traditional payment methods can't do certain things, like send money to someone in another country for a fee of $0.05 in a matter of a minute, or make a payment on a website without disclosing to them your personal details.

You may also not feel comfortable with your bank or government knowing all of your private financial interactions. There is no reason to blindly trust your bank or government to that extent.

Bitcoin hasn't been fast or cheap for a very long time, whereas many 'traditional payment methods' let people send money instantly for free.

> whereas many 'traditional payment methods' let people send money instantly for free.

Well, not really free. There's a cost associated, but it may not be initially applied to the consumer. It makes it's way through in some way though, such as an increased service cost. The most transparent industry for this is likely gas stations, which in the U.S. at least (and even then I can only comment on the regions I've observed it), they will quote different prices per gallon for cash and for credit/debit, which is them pushing the cost through to the consumer transparently. This was actually disallowed by card processing agreements in the past, because card processors didn't want the fees hampering acceptance of charge cards.

Paypal can do both of those

Paypal can also close your account at the drop of a hat, and has a very nice long list of things you can't do with your money when it's connected to paypal (a list of things which will get your account close and your money confiscated in some areas).

You can also throw stupendous quantities of cryptocurrency in the bin accidentally. So there's that.

Trade offs I guess.

PayPal doesn't work globally.

Neither does Bitcoin

In which country do cryptocurrencies not work in? They work in every country in the world. They are used a lot in Venezuela for example.

According to this[1] around half the people on Earth don't have internet access.

1. https://en.m.wikipedia.org/wiki/Internet_access

Some people need to use bitcoin to avoid capital controls, prohibitively high transaction costs or other obstacles. Just because you don't think it's useful doesn't mean no one does.

Businesses don't want their books to be public. Could even be an SEC violation if they leaked certain info through the blockchain. Some kind of greater anonymity will be required for business adoption, but that could mean something off-chain other than a mixer.

I've been thinking about this recently, and there are few cases where anonymity on the internet is a positive. Let's take Hacker News as a case-study. The open registration system without email verification or any sort of verification allows users to comment and act without retribution or fear of being called out. While I support strong security and encryption, generally being anonymous on the internet promotes negative behavior.

Anonymity on the internet causes people to act inappropriately, troll, comment offensively, conduct fraud and illegal activities.

Let's take Hacker News as a case-study. The open registration system without email verification or any sort of verification allows users to comment and act without retribution or fear of being called out. While I support strong security and encryption, generally being anonymous on the internet promotes negative behavior.

Anonymity on the internet causes people to act inappropriately, troll, comment offensively, conduct fraud and illegal activities.

Interesting, because I think your example is even more effective as a counter-example to your point. As you noted, Hacker News is pretty anonymous, and without verification. Yet, compare the comments here, with Facebook comments on pretty much any news site. Or maybe any other site with Facebook comments. There is no comparison -- Hacker News, with all its anonymity, is much more civil, collegiate, and productive.

The lack of intelligent, earnest discourse online is much more complex than anonymity or the lack of it.

I would say both cases has far less to do with the anonyminity or lack there of. HN is a heavily moderated board, with things like trolling, offensive comments, non civil discourse, etc, being stamped out fairly quickly by the moderators (who, by and large do a decent job, even if sometimes they get a little heavy handed). Whereas on most local news sites, that’s just not the case. Presumably they thought having a “real name” to the comments would temper people a bit, but by and large, we’ve seen that’s just not the case.

>Hacker News, with all its anonymity, is much more civil, collegiate, and productive.

Thanks to self-moderation. Any stupid, low-quality comment turns [dead] pretty fast.

And content attracts above average intelligence audience in general. That also helps.

I agree. But that shows the key isn't a lack of anonymity, but a larger collection of other factors.

The general (but not perfect) success of moderating HN comment moderation is a perfect example of vigilance being the price of freedom. A free society only works when Good People participate in social and political processes - even smaller situations like helping maintain a popular discussion forum.

> act inappropriately, troll, comment offensively

I'd argue this is the single most important thing the internet has given us. The possibility of honest discourse without fear of repercussion. It has single handedly changed the world.

The terms "act inappropriately", "comment offensively"… these are terms of control; tyranny of the majority.

Having to hear arguments you don't like or agree with is the single most important development humanity has ever achieved.

I hold nothing but scorn for the people who fight against minority voices.

I would argue the exact opposite: that the internet may have enabled the freedom of minorities to express their views without fear of repercussion or immediate ostracism, but that because of the nature of selection bias and the rise of echo chambers/safe spaces/whatever, the internet has made genuine discourse much, much harder. In the US, right now, the degree of polarization is so high that many people get all their news from sources with the same slant, only associate online with people who agree with them, hell, unfriend any high school Facebook friends who post things they find politically unpalatable. In what way is that "having to hear arguments you don't like or agree with"?

Anonymity does remove social ostracism, but I disagree that social coherence is a bad thing.

FWIW, on the 'un-friend' comment, I think that's really just a backlash from the unabated friending of people that you had forgotten why you fell out of touch with.

Then they post stupid shit and you're like, "oh that's right, he's always been an idiot". And unfriend/unfollow.

Political discussions were historically off-limits in many social settings and a quick way to end real life friendships. Maybe it shouldn't be that way, but hanging out with like-minded people has always been a thing.

Humans are social animals. For such groups, creating a coherent shared identity, or culture, is essential. To achieve that, groups have developed all sorts of methods to put pressure on people straying too far from the current consensus–laws being only the ultima ratio in a democracy, with most issues settled much earlier, often even without anyone consciously noticing, through softer methods of signalling (your scorn being one example).

There's nothing wrong with that. If opinions have any power, some must be worse than others, and some may be actively harmful. Therefore, it is illogical to expect the "freedom" to publish opinions the majority considers immoral while expecting complete immunity from any reactions,

I don't think anonymity is the central thing that changed the world, or the primary value of the internet. Anonymous voices are easy to falsify, so it's impossible to distinguish whether the comment represents a belief held in good faith, commercial spam, a prank, etc., and this limits the influence of online anonymity.

My belief is that the internet actually allows people to further insulate and isolate from minority POVs. Even though someone can butt into many online conversations without an invitation, this technique is interpreted as disruption and will typically only harden someone against the other side's influence.

Worse, the interfering party's humanity and commonalities are invisible to the other side; the disruptor is embodied merely as a wall of text to be torn apart, an inanimate object, instead of an earnest, sympathetic fellow being operating in good faith to contribute his/her POV to the discussion.

In the real world, the necessity of ongoing interaction with the same set of people requires everyone to at least tolerate the diversity of POVs with a bit of respect and decorum. Over time, as people grow closer and new data becomes visible, that perspective may become less and less foreign, and the good aspects of its owner revealed through regular interaction will more commonly prevent wholesale dismissal of people with a contrary POV, because there will be direct personal experience with a Real Person who holds it.

On the internet, no matter how crazy or isolated your beliefs/ideas are, you can find a cloister that will (at least appear to) parrot them back. Many people will isolate further and further into this group and feed off of each other with no input from the other side, allowing their caricatures to become more and more egregious and detached, leading to ever-increasing hostility and ultimately full dehumanization of those holding opposing POVs.

Of course, that isolation effect is not exclusive to the internet (cf. any wartime propaganda about the enemy "other", with whom most citizens would've had very little exposure), but IMO the internet allows it to occur more aggressively than ever. Anyone can retreat into their echo chamber after they've grown sick of the basic cohesion necessary to function in meatspace.

>it's impossible to distinguish whether the comment represents a belief held in good faith, commercial spam, a prank, etc

This is wrong. First thing anonymity should teach you is critical thinking. At least it should. After that, issues you are talking about are not really issues anymore.

> The possibility of honest discourse without fear of repercussion. It has single handedly changed the world.

Of course there is evidence and particular pockets of great good, but internet trolling, bullying, acting inappropriately, fraud, and scamming people greatly outweighs the good. Can't movements as important and big as Egypt still occur without anonymity? After all, a lot of the people tweeted and used Facebook with their real names and information.

[warning: this may sound hostile, which isn't intended. I want this to be educational, but I fear my writing ability may not be sufficient.]

> Can't movements as important and big as Egypt still occur without anonymity?

How is that even a question. Of course governments target people they see a potential threat. History is full of examples of movements being suppressed to protect the established seats of power.

You don't even need to go all the way to Egypt; the FBI's former program known as COINTELPRO was specifically about targeting potential leaders who speak up before they can form a larger movement.

> trolling, bullying

Have you ever actually been targeted by a person or group engaging in active trolling, bullying, or harassment? I doubt you have, because reliable anonymity is one of the only defenses against the current weapon of choice used to harass people that dare to express their opinion online: "doxing"[1]. Without anonymity, a lot more people would be subject to death threats (including their address and other specific details), calls to their neighbors or employer with slanderous accusations, swatting[2] or worse.

However, the largest problem with insisting that communication must include real names is the chilling effect it has on groups like the usual racial minorities, LGBT people, or women. The entire concept of being "in the closet" is based on the fear that comes form knowing that speaking publicly in support of civil rights might risk sever harassment or even death.

I suggest watching Vi Hart's video[3] from last year. It's difficult to watch. I'm hoping it can give you a sense sense of scale about the problems that are the daily reality of many people. Thanks to anonymous communication over the internet some of these problems are finally being discussed. People in targeted minority groups finally have a way they can communicate without risking harassment or death. Do you really want to tell them that they need to take that risk or get back in the closet?

[1] https://en.wikipedia.org/wiki/Doxing

[2] https://www.youtube.com/watch?v=TiW-BVPCbZk

[3] https://www.youtube.com/watch?v=toap7iPpTbs

Yeah, this is a good post. But the balance is hard. I've had a friend (who was not anonymous, because she had a real job in a public-facing industry) crash on my couch while she looked for a place to live because the GamerGate (anonymous scumbags) decided to take pictures in front of her house while wearing masks. It's a natural impulse to tear off the pimply-faced masks and show who's throwing around death threats like they're hard men. But, on balance, it's almost certainly a bad idea.

Which isn't to say that one has to care about the faceless mob; I'm perfectly happy not interacting with pseudonymous or anonymous people outside of--well, basically HN, but the problem pseudonymity/anonymity solves in many quarters is real.

There is a difference between rational discourse and outright harassment.

For example, is the Anshe Chung penis swam incident [1] acceptable?

[1] https://en.wikipedia.org/wiki/Anshe_Chung#Target_of_griefing

Exactly. Anonymity doesn't promote negative behavior, it promotes honesty.

In this case, we're quite literally discussing how anonymity promotes negative--if honest--behavior. If we made murder legal and free of societal repercussion, you'd probably have a lot more people expressing their inner (and honest) murderous urges. I feel that we shouldn't spin the fact that people are base and uncivil unless corralled by authority as "hey, we're letting humans be honest."

>have a lot more people expressing their inner (and honest) murderous urges

Most people would not. Minority, like psychopaths, would try do it for a little bit, but they will be put down by mentally stable people very fast. After that normal humans will create new law by themselves and you are back to square one. Your example does not really work, because you have to expose your body in real life to do stuff.

And let's not compare murder with opinions on the internet in the first place. Honesty on the internet cannot do real harm, annoyance maximum. If you are afraid of harassment, don't associate your persona with your opinion, anonymity will protect you.

We sacrificed "real life" freedom to hypocrisy already. Let's try to do better here.

The other question is, why do you need more privacy than what our financial system currently provides? I've never once thought of using Bitcoin for privacy. I know my expenditures will not become known to anybody except my bank. I know I'm protected by the bank if my card gets stolen. I know that a criminal can be easily tracked if she uses a card or a bank account. I mean what's not to like? To be honest, I'm not able to think of any legal transaction that necessitates Bitcoin. Everything that can be done with Bitcoin can be done with normal currency, with better protections and still reasonable privacy.

Bitcoin is useful for normal transactions because it allows the users to avoid a lot of hassle. As transactions become more complex, the hassles accumulate.

To accept a card for a domestic transaction, merchants must go through a lengthy approval process and forfeit some portion of each sale to the payment processor (this has gotten substantially easier in recent years; before Stripe et al, you had to get a bank to underwrite your business before you could accept credit cards). Customers must possess a supported card, which also require approval and often come with other fees that the consumer must bear. For foreign transactions, you have to try to figure out whether your card will work in the first place, and if it will, many cards will charge foreign transaction fees, currency exchange fees, have additional verification and paperwork hoops, etc.

From this perspective, bitcoin is like cash; it is simple no matter what you're doing with it, and it doesn't require the permission of any bank. If you have bitcoin, you can distribute it as you see fit, without middlemen (ignoring miners since their controversies usually don't have a direct/immediate impact on users).

Providing anonymity services is not that different from selling food. No one aids anyone by guessing who their customers are. But a sudden turn towards pro-government bullshit from people claiming to be "privacy experts" sounds rather suspicious, merely an attempt to construct a narrative. It is likely that they were in fact threatened by the government.

He could have sold it for some serious money and he didn't expose his identity. I think his identity got uncovered somehow and now he is looking to shutdown operations.

Maybe it was run by an intelligence agency/law enforcement?

> I wonder if the shutdowns last week played any his decision?

Almost certainly. But I suspect it is more a case of "I can now legally claim to have deleted and destroyed all my logs".

That will make any case directly against him very, very difficult.

By the same logic, should Tor be shutdown as well?

Running a Tor exit node can land you in pretty serious trouble in some countries. For instance:


Still, if you own a profitable business and want to stop being associated with it, the normal thing is to sell it rather than close it down.

Are you paying taxes?

If yes, then there is a very high probability that you are aiding criminals, too.

[The companies] dies a hero instead of living long enough to become a villain

For those of you who don't understand how monetary privacy can be useful outside of illegal activities, see this talk by Riccardo Spagni of Monero: https://youtu.be/pTgadb7M47E?t=58s

I just posted a comment saying "I don't see a single use for Bitcoin other than illegal activities." Will be watching the video.

>"I don't see a single use for Bitcoin other than illegal activities."

A decentralised currency for world trade that doesn't allow an arbitrarily chosen country to profit by simply printing notes and skimming off the top?

A payment system that doesn't pick an arbitrary corporation to rake in all the profits by nickel-and-diming every transaction in an economy?

That's one side of the coin. I can spin it the other way: bitcoin is a currency that can't be regulated or seized by democratic governments and justice bodies. The entire point of the Bitcoin design is to evade all regulations, the ultimate free market. In many places (in particular in America and the EU) what you call an "arbitrarily chosen country" is effectively a "democratically elected government". It's not perfect of course, there's corruption, there's lobbies but at least there's some amount of accountability.

It's also a currency where 75% of all possible coins are currently in circulation and in the hands of a tiny amount of people who are bound to become the new one-percenters (if not 0.01%) if it truly becomes the "world trade currency". With the added benefit to be almost impossible to trace and therefore to tax if the holder is even a little be clever.

I'm not saying that it's all white or all black but I'm a bit tired of the cynical libertarian cryptocurrency kool aid. "The current system is flawed, let's break everything and see what happens". And let's make a quick million while we're at it, a new sucker is born every minute.

But if there is no accountability or regulations the new one-percenters can't become as powerful as the old one-percenters, that rely on the authority of "democratically elected governments".

You'll have to give me a more detailed case for that. If we make money harder to tax and regulate the very rich will become less powerful? Won't that just make it even easier to concentrate riches?

Given how easy it seems to evade taxes nowadays when you're super rich I can't imagine how it'd be when anybody can basically generate a new untraceable wallet for any transaction. Corruption will never have been so lucrative.

I use BTC to purchase prescription drugs that I have a script for but refuse to pay absurd marked-up US prices for. Is that illegal? I suppose it is by the letter of the law. But certainly not by the spirit of it.

I am also a notable figure in some circles and do not want my name or credit card information to appear in the ledgers of certain vendors, despite them being legitimate businesses, due to potential records being exposed from hacking. I therefore use BTC and I've used mixing services on top of that.

There's plenty of other reasons, but those are my first-world ones. And I'm not even a privacy nut.

A week ago I bought some beef jerky and a wifi router with Bitcoin at Bic Camera in Shinjuku, Tokyo. Transaction was fast and easy.

I bought a can of Mountain Dew the other day, with cold hard cash. Transaction was fast, easy and required no computing power.

I'm really happy for you that you did that! But you started a thread asking whether there were legal uses for Bitcoin, and I answered with one. Why the non sequitur?


I watched this video a few days ago and my wife was sitting next to me on her own laptop distractedly listening to what I was watching and remarked it was a really good easy to understand explanation of blockchain.

The part near the end about software verification was really eye opening for me. I'd never considered the use cases of blockchains and the impact they can have outside of crypto-currencies.

I've been reading about and investing in crypto-currencies (mainly ETH) for almost a year now. I'm a software developer so seeing the promise in the technology is easier for me than my wife.

The software verification example is contrived and not at all realistic IMO.

>My plane could compare the code generated by its wing with the code stored on ledgers in the other 99 planes.

So you don't trust the code of your "wings" but you trust the code that verifies it?

And why do you need a decentralized architecture for this? Just ask the plane software vendor to certify a version of your software and use that? What does bringing the blockchain into the mix give you?

If you're in a truly decentralized scenario (e.g. a lot of open source software) then what he's describing is basically "web of trust" as implemented in PGP for instance. A lot of software is released with a PGP signature to identify the source. Again, blockchain is pointless here.

>If the plane was autonomous it could decide not to take off unless all the other 99 planes gave it the ok.

What? Why? How? How could the other planes validate that this plane is not lying about its code checksum? And how is the blockchain involved in any of this?

>And it's in contrast with how we'd solve this today. The plane would have to have communicated with a central server, a single point of failure, vulnerable to fault and tampering. This central server would be a closed system, owned by one company making it hard for other devices to inter-operate.

Ah, so we're going full FUD now. Clearly distributed and redundant architectures are impossible without the blockchain. Well, I'm dumping my retirement fund into Dogecoin, you've convinced me.

More seriously, the one thing the blockchain is good at is "timestamping" events. If I wanted to prove that I had written a certain doc right now for instance I could compute its sha256 and store it in the blockchain. Later that'll be very strong evidence that I actually did have this document at the time. That's the "immutable ledger" feature.

You could also have this certified by a notary or held in a bank vault or something. Basically it's Proof of Work (blockchain) vs. Proof of Stake (bank/notary, who would have a lot to lose if caught lying, especially for relatively small amounts of money as we use day-to-day).

"Despite the huge profit we earn, we are closing our activity. [...] But we never had any government or legal pressure [...]"

Sure? I think most would find this hard to believe. That was such an odd way to start the announcement.

Hi all! Despite the huge profit we earn, we are closing our activity. Let me explain why.

I'm bitcoin enthusiast since 2011. When we started this service I was convinced that any Bitcoin user has a natural right to privacy. I was totally wrong. Now I grasped that Bitcoin is transparent non-anonymous system by design. Blockchain is a great open book. I believe that Bitcoin will have a great future without dark market transactions. You may use Dash or Zerocoin if you want to buy some weed. Not Bitcoin.

I hope our decision will help to make Bitcoin ecosystem more clean and transparent. I hope our competitors will hear our message and will close their services too. Very soon this kind of activity will be considered as illegal in most of countries.

Cheers, Bitmixer.IO

If you take what he says at face value, it's that he's no longer interested in supporting Bitcoin because it didn't live up to his privacy expectations.

Edit: commenters below are right and I was wrong. He's really saying that he no longer feels like the Bitmixer service is needed because he no longer believes that Bitcoin should be anonymous.

I read it slightly differently.

He said "I was convinced of a right to privacy" and "I was wrong". This is someone who has either seen (or perhaps been shown) the sort of thing that is enabled when you give criminals a way to exchange value anonymously. And found that he did not want to be the agent enabling that sort of thing.

If an officer came to you and said, "Here is a photo of a 12 year old girl who was kidnapped and sold as a sex slave. The payments were all in bitcoin and we would have caught the criminals involved if they had not used your service to hide their transactions." I have a tremendous amount of respect for anyone who would look at that situation and decide to turn off their service and forego any more profit to keep from being a part of that pipeline.

>If an officer came to you and said, "Here is a photo of a 12 year old girl who was kidnapped and sold as a sex slave. The payments were all in bitcoin and we would have caught the criminals involved if they had not used your service to hide their transactions."

They'd just use cash. The argument against anonymous transactions and tumblers is the same as the argument against cash. Besides, this kind of emotional blackmail is the reason people avoid talking to the police.

You can't send cash over the internet. That's what Bitcoin enables.

You just use WU. May be even more anonymous than bitcoins if you bribe the agents well enough.

> You just use WU. [Western Union]

While true, criminals dislike getting ripped off just as much as normal people and have a wider variety of remediation techniques at their disposal. Cash pipelines are really really hard to manage without losses and/or disclosing identifiable/traceable information.

Well a: he could work with LE if he felt this was some strong moral point, and b: LE saying that is definitely lying. There are other services, and there's now more solid ways (e.g. Monero) to hide cryptocurrency. So it's super unlikely it was just his service providing a totally unique thing and without bitmixer.io oh no criminals would just give up and return their sex slaves.

What about people writing secure messaging services? "This terrorist attack would have been prevented if it wasn't for your encryption!"

No one said law enforcement literally went to him and tried to convince him it was a bad idea. And if they did, he still made the decision himself, right? Unless we're subscribing to the theory that he was compelled to shut down.

I would personally refuse to work on a secure messaging service because the thought of making a product that will be used by awful people to do awful things would actually be offputting. If that's less of a concern to you than having secure communication, whatever, go nuts. Not everyone is a gung-ho privacy advocate though.

> You may use Dash or Zerocoin if you want to buy some weed. Not Bitcoin.

Sounds like when TrueCrypt shut down and they recommended Microsoft's BitLocker.

Yeah why not recommend Monero, another cryptonight coin, which has way more traction and is actually used on some "illegal" sites? And has hardforked a few times to continually improve privacy?

The story of truecrypt and Paul Le Roux is one of the, if not the, most fascinating stories in technology there has ever been.


That's crazy. I imagine that's not the only crazy thing going on around us that most of us will never know about unless it's published in a magazine. And for every story that's uncovered, there's probably many more that will never be. Just imagine all the drug networks and such that must be operating in the United States, and to think that's in a developed country - what about all the lesser developed countries? There's crime everywhere that most of us will never see.

It's unfortunate that such crime exists, and it's also fascinating that we can operate as a civilization with such crime going on. It's also unfortunate that such criminals will most likely adopt cryptocurrencies. Criminals are innovative, but that doesn't mean all innovations come from criminals or are used for criminal activities. Just like criminals use cash; that doesn't mean all cash is used for crime, and if criminals use cryptocurrencies, that doesn't mean all cryptocurrency is used for crime.

I suppose that's a conundrum that crypto creators face: knowing that criminals will use your work to protect their criminal activities. For some people, something should be avoided if it allows for even one single instance of the smallest crime. Other people understand that if you want something good, you have to accept that some people will use it for evil. Like the First and Second Amendments of the US Constitution; Free Speech and the right to bear arms can both be used for good and bad.

Thank you for sharing the link, that was a very interesting read.


"im cu si" isn't any Latin that I've ever seen. At the very least, it's not classical.

Sure, but do you also know where Elvis is and who shot JFK?

That sounds more like he no longer believes that privacy is a good goal for legitimate cryptocurrencies and is stopping the service as an ideological stand against using bitcoin for anonymous transactions.

Owner says: "Bitcoin has no future with drug/weapon traffic or any other illegal activity."

Cash and gold trade has done well for thousands of years. As another commenter put it:

"If you truly believe in bitcoin as a currency then it should be used to buy anything and everything good or bad."

The most likely explanation is government pressure coming from side channels, but nothing specific. Likely has a warning shot fired across his bow and he's getting out of it with these idealistic words as his message.

That doesn’t mean he has to work to make it easier to be used for those things, though.

I don't see how these bitcoin laundering services worked. Since it costs money to use a bitcoin tumbler, it's slow, and there's a non-zero chance that the operator will simply steal your money, there is very little reason to use a coin tumbler unless you're trying to hide the proceeds of crime.

In which case, you are just mixing your coins with other criminals, as there's going to be very little 'clean' money going into the mix. So your coins that were 'tainted' by buying weed online are now possibly associated with arms dealing, fraud, child porn or any number of serious crimes. Doesn't seem like a great benefit.

There's a non-zero chance, but if enough people are using a service, it's probably OK. And you can just put a bit through at a time, so you never risk a ton. The fees are 1-3%.

It provides privacy. Why should Coinbase be able to see where my money went?

As far as clean, if a criminal is cleaning their own money but gets other "dirty" coins, that's fine, since they're not connected to any crimes they committed. Plus, presumably, the other dirty coins will be spread over so many users that it just does not provide a real return on investment for LE to follow.

I've never understood the focus on explicit services for Bitcoin mixing. I made a comment on a different post a while ago and I'll paste it below:

You're implying that mixers and tumblers are ONLY dedicated malicious services.

What you're forgetting is that hot wallets used on popular bitcoin services also serve as tumblers. The distinction between a "malicious tumbler" and a service's hot wallet is just the dedicated use.

For example, if a bitcoin shopping site had a wallet you deposited coins into, you'll be recording that you have <number> of coins and they will show that. Your coins will be mixed with their hot wallet and who knows how long they keep them in there.

If you wait a few days and withdraw, chances are that most (if any) are NOT your original coins.

Not to mention, if you blacklisted these coins, then users who receive these coins wouldn't be able to legitimately use them.

TL;DR: Tumbling services are just dedicated to tumbling bitcoins. Most semi-large bitcoin services with hot wallets inadvertently tumble their user's bitcoins.

What other pooled wallet service doesn't keep records on purpose or has no need to? Gambling?

To have worked in Gambling, it is heavily regulated.

To be allowed to operate in X country, we had to specifically store a replica of customers accounts in their jurisdiction, so that all servers and data could be seized by the local law enforcement should the need arise.

The stories goes that these requirements raised after some shady gambling companies left with all their customer funds.

So how do those offshore online gambling companies work then? Do they all have KYC type records or are there some places where they don't?

Years ago when I worked for this type of company we moved our prod game servers to Indian reserves in Canada. That was very costly, later moved to Costa Rica.

Do a lot of services allow you to refund money to a new account?

As I understand it, bitcoin doesn't track coins so much as it tracks the funds associated with account numbers. When you have "dirty" coins, it's really that people know an account (say, A) has illegitimately gotten funds (say, $x).

A tumbler functions by taking $x from A, transferring it to the tumbler account (say, T), and then transferring it on to other accounts (eg, B1, B2, ..., Bn) in various amounts that total the input ($x) minus some fee. Something like:

    (A, $x) -> [T] -> [(B1, $y1), (B2, $y2), ... (Bn, $yn)]
In order to use a service as a tumbler, you'd need them to a) keep secret what you bought from them (ie, the difference between $x and $y) and b) allow you to transfer the funds out to a different account number than the one that sent the coins in (and ideally, a few such numbers).

It would seem like any legitimate business would hand over that information when requested (or subpoenaed).

> As I understand it, bitcoin doesn't track coins so much as it tracks the funds associated with account numbers.

It's actually the opposite. The blockchain does track coins, but not accounts or account numbers. Rather, each transaction involves "scripts" which specify some conditions with which coins can be used as inputs to another transaction.

In a normal transaction, one key can spend the coins, but e.g. it is possible to send coins to a script that is impossible to satisfy, therefore the coins are unspendable, yet don't exist in an 'account' at all.

I've never understood the purpose of Bitcoin mixers. The use-case seems to be half-assed money laundering. You're concealing the source of money[1], without bothering to invent a plausible alternate source. It's at best like a petty criminal who "launders" his money by simply claiming to have found it.

[1]-Poorly at that -- do we really think the people who catch launderers of actual money will be stymied by the transaction log of your average tumbler? It makes way more sense to launder money by renting BTC mining hardware and electricity from someone who doesn't care where the money came from, taking a loss but effectively trading your "tainted" BTC for brand-new BTC.

It's not money laundering, it's vanishing with the traces of to where went that amount of money someone could be tracking.

That kind of service is not needed if you're dealing with cash.

Money laundering, if you need that, is a different step that must be taken after the "mix".

That step is needed if you're dealing with paper assets like wire transfers and real estate. It is considered money laundering in those cases, and they catch people doing that with some regularity.

It's even worse than that. It's probable that in some cases both sides of the "mix" had connections to these illegal markets.

Vendors mixing coins with each other.

good mixers do that. They give you coins that are completely unrelated to yours

Completely unrelated, in that they've never passed through the mixer? Then, what does the mixer do with the coins you've sent to it?

completely unrelated as in if you follow the transaction graph they haven't crossed paths, so you'd need the mixer log to break the mixing.

It's difficult to know what they do with the coins, but they could be selling them on an exchange to move onto a different currency and then buy bitcoin again.

This sort of thing has been done with actual money, basically forever. It's exactly what forensic accountants are trained to untangle, in cases where far less information is available. It's not going to fool any serious player.

Nobody's bothered doing this yet on any kind of scale, but that is only because major players in the underground Bitcoin space have found other ways to get caught.

getting the information from a tightly regulated bank could be a different story to getting it from an anonymous service on Tor though. They probably don't even store it.

This reads to me like someone writing while a gun is pointed to his head.

It makes absolutely no sense, and it doesn't feel natural.

My guess is that they have been chased by some government agencies and now they are closing down and putting this message to show good faith.

It sounds to me like someone who was poor and believed in privacy, and is now rich and does not. It is funny how conservative you can become when you get a lot of money.

If this wild theory is to be admitted, you must also theorize that the service was honeypotted for a while, and the proprietor is only now permitted to shut it down.

With no evidence for either, it's simply speculation.

So it makes them huge profits but they simply don't want to keep it going? Time for someone to step in and take their profits.

Yeah, who would have guessed that money laundering could be profitable?

Theory: Operator (who seems European) was also purchasing/selling in quantity on Hansa. Given the amount of information gathered by the Dutch Police, it's possibly a risk-based decision by the operator to clean house.

It's funny because a bunch of people in a forum are saying that: "People are free to use whatever coin for whatever they want" and "people do have the right to enjoy..." but it's "stupid/crazy" that they're shutting down. Seems like "freedom" is selective.

Warrant canary?

Well, at least they aren't exit scamming ...

To anyone reading this, I wouldn't infer that privacy and fungibility in Bitcoin are not improving. The recent activation of segwit enables practical lightning networks, which do provide a layer of privacy, and also makes it easier to add a feature called schnorr signatures.

Schnorr signatures will lead to something dubbed by some as "incentivized privacy". https://bitcoinmagazine.com/articles/the-power-of-schnorr-th...

The declarations make no sense: "Bitcoin is not anonymous, so I'll shut down the service I was running to help people overcome this non-anonymity, which I created for this exact goal."

Where is the new information? Every reason he is giving was already there and already clear at the beginning.

Let's hope that other services stay up and running. FoxMixer.com has been the mixing service that I used so far. Had no issues, but who knows if they continue operation or if they also shutdown. I don't hope so.

You can simply use SatoshiDice or any other gambling site to mix small quantities.

Doesn't SatoshiDice send back your win to the same address (chaining off the previous output, so they can do it immediately)? Or has it changed?

I haven't used it in a while, but last time I did you could use a different address.

Dice gambling services provide zero mixing.

Is there still a market for a mixer/tumbler now? I think there are still plenty of ideas out there, that haven't been done, to help ensure anonimity.

Could this simply be related to the 1st of August potential bitcoin fork? Something like cashing out, before all the bc of the mixing service are worthless?

Why do you need this kind of service? how is it different than selling your BTC on a major exchange, than immediately buying the same amount seconds after?

The exchange most likely has KYC/AML information, so could be coerced into helping to trace your money.

So it goes. We still have Bitcoin Fog and Helix, so whatever.

It is trivial in todays market to do this anyway, if you were so inclined. shapeshift.io allows you to exchange a crypto for some other crypto, and it doesn't even require a login. Peer-to-peer across blockchains. When lightning is deployed trivial will become less than mundane.

Pop! The genie is seriously out of the bottle. If you don't know about how these things work, you should probably take some time to at least start to understand it.

Why would people need mixers if you can use shapeshift and monero ? Monero is anonymous, it solves the problem i guess


Second this, Monero essentially has coin mixing built into the protocol. It's not convoluted and its use case is very clear.

Please expand upon this comment if you have the time. I've read some opinions that are opposite to what you just stated but I am all ears to hear more to the contrary.

Here's a good post about why not to use Dash


Court documents detail 12k of Monero and an unknown amount from Cazes' personal wallet.


Why is Zcash terrible for privacy?

It's run by a US company where its CEO said on Twitter that they think they can make it traceable. Its privacy is optional and wallet balances are public. And it used a trusted setup.

The trusted setup only requires that you trust that at least one of the participants in the setup ritual was honest and destroyed their key. If they all lied and kept their key, they can't compromise privacy either. They can only create new coins and devalue others' coins.

The wallet balances are not public if you use the private option. You're right that privacy is optional, and that is not good. But those who do use the private option do indeed get good privacy.

As for the CEO's statement, I haven't seen it. I also don't think one should be basing their decision on whether to trust a cryptocurrency's privacy claims on what their CEO says. It should be based on audits of the source code.

https://twitter.com/zooko/status/863202798883577856?lang=en "And by the way, I think we can successfully make Zcash too traceable for criminals like WannaCry, but still completely private & fungible. "

And aren't private transactions like 5% or so, making them very visible?

Looks like the private transactions make up 23% and 15% of number of transactions and volume of value transacted, respectively:


I agree that unenforced privacy is not good.

Creating a private transaction uses up a lot of computation and memory resources.

No mining pool, exchange or high throughput business is going to send secure transactions.

Although, maybe they could charge extra for it.

Zcash is backed by a US company, and required a trusted setup w/ pre-mine ("founders reward").

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