With growing regulatory pressure against Bitcoin mixers, the historic BitcoinTalk forum founded by Satoshi Nakamoto himself has decided to ban the link sharing and promotion of crypto mixer platforms, also known as blenders.
What is a Crypto Mixer?
BitcoinTalk’s post describes mixers as:
“A software is considered a mixer if it meets the following requirements:
1. It has a feature advertised for taking property, improving its privacy somehow, and then returning roughly the same type of property. […]
2. It is possible for the mixer to steal property passing through it. Assume that the sender does everything as correctly as possible. Also assume that no miners/verifiers on the base-layer cryptocurrency are evil. But assume that every other actor involved is evil (everyone able to vote in a DAO, every coordination server, every counterparty, every member of a multisig, etc.). Ignore short-term software bugs which are expected to be quickly fixed.
3. The service does not collect KYC-type info from all users.”
In other words, a mixer is a software that blends user’s bitcoin with those of other users to reduce their traceability.
Thus, it is a tool for achieving transaction anonymity, something not included in the original design of the Bitcoin blockchain, which instead provides for a transparent public ledger.
Why Ban the Promotion of a Service That Provides Privacy?
An argument in favor of the ban is that allowing this level of anonymity and making it impossible to trace the counterparts of one or more transactions, makes the Bitcoin network fertile ground for potential criminal activity and money laundering.
Cryptocurrency mixers are not explicitly illegal in many jurisdictions and can be used to meet legitimate privacy needs, like allowing people who live under ruling of oppressive regimes to transact freely despite state-level limitations which deprive the individual of their right of self-determination.
Related reading: Risks And Benefits Of Mixing Bitcoin
However, the potential for these tools to be used for unlawful activities, is the main reason they are strongly opposed by law enforcements.
A case in point is the TornadoCash case, a cryptocurrency mixer founded in 2019, which was sanctioned by the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) as it has been used to launder as much as $7 billion.
As the U.S. Treasury Department itself reports, “mixers are commonly used by illicit actors to launder funds, especially those stolen during significant heists.”
In any case, in the United States of America, the Financial Crimes Enforcement Network (FinCEN) considers mixers as money transfer services within the jurisdiction of the Bank Secrecy Act (BSA), requiring them to be registered and meet certain legitimacy criteria.
In an environment where cryptocurrency mixers are becoming “grayer and grayer”, the forum administrators have made the decision to ban the promotion of these controversial privacy tools.
As reported in the post published on December 1, “Bitcointalk.org aims to allow about as much freedom as is reasonably possible. But this is not a darknet forum, […] and it is no longer reasonably possible to allow linking to mixers.”
The choice stems from the fact that more and more mixing services emerge only to be shut down by regulators as soon as they exceed a certain size.
Seeing as this technology is heavily regulated by authorities, one might believe that for it to have a chance at development, it’s necessary to prevent the most well-known and authoritative Bitcoin forum from essentially becoming a pre-filled blacklist that regulators can freely use.
After all, the low visibility was something extremely welcome and useful even for the very first Bitcoin developers.