22 MAY 2019
The Dutch Financial Criminal Investigative Service has seized the website of a bitcoin transaction mixer in a crackdown involving Europol and other authorities.
Calling it the the “first law enforcement action of its kind against such a cryptocurrency mixer service,” Europol said in a statement Wednesday that the seizure of Bestmixer.io followed an investigation that began last summer. As part of the move, police seized six servers based in Luxemourg and the Netherlands.
Coin mixers or “tumblers” like Bestmixer.io work by pooling funds together and creating a web of new transactions in an effort to obfuscate their original source. Typically, coin mixer users pay a fee on top of the funds they send in, receiving back their money from a wholly new address.
Europol alleged that much of the money that passed through Bestmixer.io “had a criminal origin or destination,” contending that “in these cases, the mixer was probably used to conceal and launder criminal flows of money.” The agency said that the service, which launched in May 2018, mixed approximately 27,000 bitcoins.
“Today’s Bestmixer seizure shows an increase in law enforcement activities on pure crypto-to-crypto services,” said Dave Jevans, CipherTrace CEO. “This follows on the heels of European AMLD5 regulations and the views expressed by US FinCEN that crypto-to-crypto services are considered to be money services businesses and must comply with those regulations. This is the first public seizure of a bitcoin mixing service, and shows that not only are dark marketplaces subject to criminal enforcement, but other services are as well.”
Europol’s statement suggests that the investigation isn’t complete and that authorities intend to follow up on the information gleaned from this week’s server seizures.
“The Dutch FIOD has gathered information on all the interactions on this platform in the past year. This includes IP-addresses, transaction details, bitcoin addresses and chat messages,” the agency said. “This information will now be analysed by the FIOD in cooperation with Europol and intelligence packages will be shared with other countries.”
“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,” said Jevans.
Multi-million euro cryptocurrency laundering service Bestmixer.io taken down
First law enforcement action of its kind against such a cryptocurrency mixer service
Today, the Dutch Fiscal Information and Investigation Service (FIOD), in close cooperation with Europol and the authorities in Luxembourg, clamped down on one of the world’s leading cryptocurrency mixing service Bestmixer.io.
Initiated back in June 2018 by the FIOD with the support of the internet security company McAfee, this investigation resulted in the seizure of six servers in the Netherlands and Luxembourg.
One of the largest mixing services
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.
Nature of the service
A cryptocurrency tumbler or cryptocurrency mixing service is a service offered to mix potentially identifiable or ‘tainted’ cryptocurrency funds with others, so as to obscure the trail back to the fund’s original source.
The investigation so far into this case has shown that many of the mixed cryptocurrencies on Bestmixer.io had a criminal origin or destination. In these cases, the mixer was probably used to conceal and launder criminal flows of money.
The Dutch FIOD has gathered information on all the interactions on this platform in the past year. This includes IP-addresses, transaction details, bitcoin addresses and chat messages. This information will now be analysed by the FIOD in cooperation with Europol and intelligence packages will be shared with other countries.
23 MAY 2019
“We need a first step toward more privacy,” Vitalik Buterin, founder of the ethereum blockchain network, said Wendesday.
In a new HackMD post, Buterin detailed a design to help obscure ethereum user activity on the blockchain. More specifically, Buterin proposed a “minimal mixer design” aimed at obfuscating user addresses when sending fixed quantities of ether (ETH).
According to Buterin, users can transact in one of two ways. “The default behavior” is to send and receive ether from a single account, which, of course, also means that all of a user’s activity will be publicly linked on the blockchain. Alternatively, users can transact through multiple accounts or addresses. However, this too isn’t a perfect solution to obfuscating user activity on the blockchain.
“The transactions you make to send ETH to those addresses themselves reveal the link between them,” detailed Buterin in his post.
As such, by creating two smart contracts on ethereum – “the mixer and the relayer registry” – users can opt-in to making private transactions on the ethereum blockchain through what is called an anonymity set.
Buterin told CoinDesk in a follow-up email:
“Anonymity set is cryptography speak for ‘set of users that this thing could have come from.’ For example if I sent you 1 ETH and you can’t tell who exactly it was from but you can tell that it came from (myself, Alice, Bob or Charlie), then the anonymity set has size 4. The bigger the anonymity set the more privacy you have.”
Buterin added that the design does not require any changes to ethereum on a protocol level but could be something implemented by a group of users today.
To this point, Eric Conner, product researcher at blockchain startup Gnosis, noted that a key strength of Buterin’s proposal was precisely its ease for integration.
“Strengths are it gives us a solid privacy solution if users want it,” Conner explained. “The goal is to make a solution that can be easily integrated into current wallets.”
At the same time, the design proposed by Buterin does require users to pay a fee – called gas cost – in order to send private transactions. However, for the use cases that Buterin envisions in his mind the fee won’t be a major deterrent for users.
Buterin tweeted about the design:
“The main use case I’m thinking of is a one-off send from one account to another account so you can use applications without linking that account to the one that has all your tokens in it. So even though it is a 2m gas cost, it only needs to be paid once per account, not too bad.”
31 MAY 2019
Bitcoin Blender Cryptocurrency Mixing Service Shuts Itself Down
Cryptocurrency mixing service Bitcoin Blender has reportedly willingly shut down after issuing a short notice asking its users to withdraw their funds, tech news outlet BleepingComputer reports on May 30.
Per the report, the message describing the service that appeared on the homepage of the website present both on the Tor network (often referred to as the darknet, dark web or deep web) and on clearnet before it shut down was the following:
“We are a hidden service that mixes your bitcoins to remove the link between you and your transactions. This adds an essential layer of anonymity to your online activity to protect against ‘Blockchain Analysis.’”
The shutdown was reportedly announced both on the homepage of the dark web website and on the BitcoinTalk Forums on Monday. Some users reportedly missed the short time window and were not able to withdraw their funds, as one user said on the aforementioned forum:
“I recently came to know about the shutting down process of bitblender, I had much coins saved onto it. I unfortunately missed the withdrawal warning as I was away for past few weeks. I am trying to access http://bitblendervrfkzr.onion/ for last 2~3 hours but I can not succeed.”
As Cointelegraph recently reported, Dutch, Luxembourg authorities and Europol shut down one of the three largest cryptocurrency tumblers, BestMixer, after an investigation found a number of coins from the mixer were used in money laundering.