By Evan Spicer
Director of Cryptocurrency Investigations
MyChargeBack
People who are concerned about fraudulent players on the blockchain may feel reassured that since anyone can see the path of funds, their money can be easily traced.
However, crypto mixers have been a game changer and not always in a positive sense. These tumblers “mix up” data to make it impossible, or at least very difficult, to identify and trace blockchain transactions.
Crypto mixers or tumblers were designed to provide privacy to legitimate crypto holders. However, crypto frauds may take advantage of this technology to launder money on the blockchain.
The Role of Crypto Mixers in Fraud Operations
A report by data analytics company Chainalysis found that the use of crypto mixers has doubled between 2021 and 2022 and 10% of funds from illicit addresses are sent through crypto tumblers to disguise information.
Using crypto mixers isn’t illegal. Popular tumbler Tornado Cash insists that its technology is intended for individual customers who are searching for an extra layer of protection.
However, since crypto mixes are available to everyone, there is no way of knowing, at least from the outset, whether these anonymity tools are being used by regular, honest crypto users or a major fraud operation.
In the wake of crypto winter and the bitcoin crash, there is a continuing conversation about governments taking steps to regulate cryptocurrency. With new rules governing digital currency appearing inevitable, restrictions, or at least rules, governing the use of crypto tumblers are indeed possible. Proposed policies regarding these tools were outlined by the National Crime Agency (NCA) in the United Kingdom.
The role crypto mixers have played in high-profile crypto frauds that have robbed customers of millions is concerning. It’s clear that rules outlining the proper use of mixers, and when and where they will be allowed, would provide welcome oversight and security.
How Easily Can Crypto Frauds Hide on the Blockchain?
One benefit of the blockchain is that all transactions can be seen by anyone. This discourages cyber criminals from laundering money on the blockchain. They may send stolen funds through “mules” or intermediary anonymous bitcoin wallets, but crypto investigation methods can trace these transactions from the original user to the wallet where it was cashed out.
Mixers and tumblers create a challenge for crypto investigators, but it isn’t an insurmountable one. Many exchanges don’t allow the use of mixers. Even if a fraud victim’s funds get mixed up in a tumbler with other stolen assets, advanced technology and investigation methods can be applied to uncover or supply clues that can pinpoint the location of stolen coins.
However, it’s clear that you can’t go it alone. Whether or not a mixer was used by cyber frauds to cover up transactions, you need experts on your side to investigate your case and work to uncover the identities of people behind crypto frauds.
MyChargeBack Will Investigate Your Crypto Case
If you have lost money on the blockchain to unregulated brokers, bitcoin wallet hacking or fake merchants, talk to the MyChargeBack team. Our crypto investigations will provide evidence to bolster your claim.
MyChargeBack has developed working relationships with law enforcement agencies worldwide, have extensive knowledge and experience with crypto tracking and can improve your prospects of getting your funds back.
