If blockchain analysis company Chainalysis is right, only a small fraction of the cryptocurrencies sent to and from crypto mixers are used for illicit purposes. According to the New York-based firm, illicit funds account for just 8.1% of the total amount of funds sent to crypto mixers.
In a recent webinar titled Cryptocurrency Typologies, the blockchain analytics firm suggested that users of mixing services take advantage of the option for privacy reasons. Many darknet users, on the other hand, send their coins directly from cryptocurrency exchanges.
According to Hanna Curtis the product data manager at Chainalysis, although the illicit funds originate from a small portion of all the mixing services users, a large fraction of the stolen coins ends up being mixed. Speaking to Cointelegraph he said:
“A lot of people are using mixers just for personal privacy, but we do know that a lot of illicit funds end up in mixers.”
Chainalysis believes that 8.1% of all mixed cryptocurrencies were stolen, while only 2.7% of cryptocurrencies had been used in darknet markets. As such, fewer than 1 in 11 cryptocurrencies sent to mixers could be identified as being used for illicit purposes. In addition, 1.9% of mixed coins come from gambling or betting sites, which may be illegal depending on the jurisdiction of users and sites.
By contrast, almost half of all mixed cryptocurrencies were shipped from exchange platforms. This includes 40% of traditional crypto exchanges and 7.7% of peer-to-peer exchanges. More than a quarter of the mixed cryptocurrencies came from other mixers.
While Chainalysis did not go into detail, centralized mixers appear to receive a higher proportion of coins used in illicit activities than “decentralized” mixers. For example, Bestmixer, a centralized mixer that was shut down by police in May 2019, received many cryptocurrencies for which the destination origin could be identified as illicit. The service mixed more than 27,000 cryptocurrencies worth about $200 million.
Chainalysis noted that decentralized mixers like Wasabi Wallet have experienced exponential growth this year. Where the wallet mixed about $90 million of Bitcoin by August 2019. In total, Wasabi Wallet mixed $250 million in Bitcoin in 2019, according to Chainalysis.