Many people believe that Bitcoin is anonymous and that nobody can see who is behind each Bitcoin address. That is true to some extent but with blockchain analysis there is a tool available that can reveal the origin of funds. Most crypto companies use such services to block funds that originate from dubious sources such as Darknet marketplaces. Criminals are creative and responded with so-called Bitcoin tumblers to disguise their digital trails.

What is ChipMixer, why did authorities close the service and why are crime and Bitcoin don’t go together?

What is a Bitcoin mixer?

A Bitcoin tumbler or Bitcoin mixer is a third-party service that pools transactions and processes them to the designated recipient. Since transactions originate from a pool and not directly from the sender, the link between sender and recipient is cut or at least loosened.

Many people use Bitcoin mixers because they believe that they have the right to protect their transactions from prying eyes. While this idea appeals basically to data privacy many groups such as black hat hackers or Darknet marketplaces also rely on such services. That being said, most transactions from Bitcoin mixers are being tainted by blockchain analysis software and honorable crypto businesses won’t accept them.

ChipMixer was such a service and apparently the website laundered over $3 billion worth of Bitcoin for criminals, hackers, and even foreign intelligence services.

US-authorities close down ChipMixer

Yesterday, the Department of Justice published a press release that ChipMixer has been successfully taken down by U.S. and German authorities. Over $46 million in Bitcoin were seized along with the servers and several terabytes of data.

All previous users are now at risk being linked to illicit activities and depending on the evaluation of the data, they might be even at risk becoming a target for criminal investigation.

A prime suspect in this case is still on the loose and authorities are searching for him internationally. Should he be arrest and fund guilty by an U.S. court he might be sentenced up to 40 years of imprisonment.

Crime and Bitcoin don’t go together

Crime don’t pay. Neither in the physical realm nor in the digital space. Authorities have proven once again that Bitcoin is not a safe haven for criminals. This not only because of their hard work but because Bitcoin was meant to be transparent.

It is open by design. The fact that it can be audited by anybody at any time is one of its most important features. This guarantees that every transaction and every piece of data can be verified. That is what’s making Bitcoin valuable. Hiding behind a transparent system isn’t a good idea as the case of ChipMixer clearly shows.