What Are Coin Mixers and How Do They Work?
Coin mixers, also known as coin mixers, are services that obfuscate the origin and destination of cryptocurrency transactions. Users deposit cryptocurrency into the mixer, and then receive the same amount mixed with other transactions, obfuscating the connection between the sender and the recipient.
Mixers like Tornado Cash have faced sanctions for allegedly facilitating money laundering, but many advocates argue that they have legitimate applications in protecting privacy. For example, activists or journalists may need to protect their identities when making sensitive transactions.
However, because of their high anonymity, coin mixers are also targets for cybercriminals, leading to their use for money laundering. As a result, regulators and governments have taken legal action to stop these services, such as the arrest of the founder of Bitcoin Fog and the sanctions against Tornado Cash.
The recent decision by the US Fifth Circuit Court overturned sanctions against Tornado Cash, arguing that smart contracts cannot be considered “property” because they operate without human intervention. However, the debate over privacy and money laundering through coin mixers is far from over.