Coin mixers, which allow users to obscure their transactions, have been the target of law enforcement agencies around the world. The latest one to face a crackdown is ChipMixer, a crypto mixing service that was allegedly involved in money laundering activities. In an operation conducted by German and US authorities, with the support of the European Union Agency for Law Enforcement Cooperation (Europol), four servers, 1909.4 Bitcoins (nearly $47 million), and 7 TB of data were seized from ChipMixer. Other national authorities involved in the crackdown include the Cantonal Police of Zurich, Poland’s Central Cybercrime Bureau, and Belgium’s Federal police.
The joint investigation revealed that ChipMixer had laundered 152,000 Bitcoins, most of which were tied to darkweb markets, ransomware groups, illicit goods trafficking, procurement of child sexual exploitation material, and stolen crypto assets. It was the crackdown on the Hydra Market darkweb platform that helped investigators uncover transactions worth millions of euros. ChipMixer’s service was reportedly used by prominent ransomware actors such as Zeppelin, SunCrypt, Mamba, Dharma, or Lockbit to launder ransom payments they had received. Authorities are also investigating the possibility that some of the crypto assets stolen after the bankruptcy of a large crypto exchange in 2022 were laundered via ChipMixer.
Cryptocurrency mixing platforms or tumblers typically receive digital assets from users, mix them with other coins, and then send the equivalent amount of “mixed” coins to a recipient address, thereby concealing the connection between the sender and recipient. These tumblers have legitimate use cases for the most part, but they have become attractive tools for cybercriminals, prompting law enforcement to crack down on them. For example, the Office of Foreign Assets Control (OFAC) accused Tornado Cash of facilitating users to launder billions of dollars in digital assets, including $455 million allegedly stolen by North Korean hacker Lazarus. The sanctions froze US assets held by Tornado Cash and prohibited companies and individuals in the country from doing business with it.