Mixing services are often used by criminals to launder stolen Bitcoin. This has made these services a target for law enforcement agencies who try to regulate them as money transmission businesses. Because centralized custodial mixers temporarily take ownership of users’ coins, they can be at risk of losing these assets in the event of a hack or server downtime. Custodial mixers are also at a higher risk for exposing their users to malware or other forms of identity theft.
The most popular crypto mixers are non-custodial, which means they do not hold users’ coins. Instead, users send their Bitcoin to a mixer and it then mixes it with other users’ coins in a pool before sending the mixed funds back to each user’s address. Some mixers add extra privacy features such as ring signatures or zk-SNARKs to the withdrawal transaction to further obscure the mixing process.
While some people use crypto mixers to engage in illegal activities, many people do so out of a preference or need for financial privacy. This is particularly true for people living under oppressive regimes who wish to conduct legal transactions without fear of government tracking. Additionally, large businesses and high-net worth individuals benefit from the ability to move a lot of money without their transactions being publicly visible on the blockchain.
Despite these benefits, mixing services remain at the center of controversy. It is important for users to understand the risks and legalities of interacting with these services before making a decision to do so. Crypto Mixer