The idea that any cryptocurrency transaction is private by default is a common misconception. In fact, the opposite is the case. Blockchain data is public and transactions can be tracked. Cryptocurrency mixers and privacy coins were created to bring privacy to this open financial system.
However, Chainalysis noted in its report that it is “not aware that any bitcoin or Ethereum mixer is currently following these rules.” Bitcoin transactions are easy to trace, except when the sender uses a mixer to confuse the link between their cryptographic address and their real identity. While this was not the first cryptocurrency mixer to be attacked by the United States government, the difference is that, unlike the Bitcoin Fog case, Tornado Cash is not centrally managed. However, this capability has turned bitcoin transaction mixers into hotbeds of money laundering activities. You can use a centralized mixer, which are third-party services that receive bitcoins, extract other bitcoins from other deposits and return an equivalent amount of bitcoins at the end of the transaction.
According to a July report from Chainalysis, cryptocurrency mixers are a “reference tool” for cybercriminals who trade cryptocurrencies, and illicit addresses account for nearly a quarter of the funds sent to mixers since January. The ability to hide where funds come from has turned bitcoin mixers into a hotbed of money laundering activities.
