Bestmixer.io Seized for Large Scale Money Laundering
Dutch authorities, working with Europol, have just shut down Bestmixer.io – one of the largest cryptocurrency mixing services in the world, implicated in money laundering on a large scale. Users may have cause for concern, since their contact information, bitcoin addresses and transactions, and chat histories are now available to the intelligence agencies.
In what is apparently the first law enforcement action of its kind, the Dutch Fiscal Information and Investigation Service (FIOD) has shut down the cryptocurrency mixing service Bestmixer.io. Working with Europol, the FIOD yesterday took control of six servers in Luxembourg and the Netherlands.
Bestmixer was one of the three largest cryptocurrency mixing services in the world. Since its launch in May 2018, it has been responsible for mixing over $200 million in BTC, BCH and LTC. The FIOD operation against the mixer has been running since June – almost as long.
What are mixers?
Mixers or tumblers are services that seek to anonymise cryptocurrency transactions, allowing users to hide their funds from the authorities or other interested parties. While the blockchain transparently records every transaction, addresses are pseudonymous – they are not intrinsically connected to a real-world identity. By pooling funds from lots of users and moving them between many different addresses, before paying them out to new (never used) addresses, mixers obscure the origins of funds paid into them.
However, there was evidence that much of the money deposited to Bestmixer was the result of criminal activities, and that the service was used for money laundering. Similarly, much of the money paid out by Bestmixer was subsequently used for criminal purposes.
‘Crypto-only’ is no defence
The seizure of Bestmixer’s servers will be of concern to its users. The FIOD has gathered information about users and their interactions with Bitmixer for the past year. This includes their IP addresses, crypto transactions and addresses, and even their chat messages. This will now be analysed by the FIOD and Europol, and the information will be shared with the relevant authorities in other countries.
While there have been numerous raids of darknet markets over the past five years – most famously the Silk Road, which was shut down by the FBI in 2013 – this is one of the first crypto-only services to be targeted by the authorities. In the past, law enforcement has generally been more interested when bitcoin interfaces with the conventional financial system (e.g. exchanges), or when it is used to buy illegal goods such as drugs and weapons in the real world. Bestmixer was an online only, crypto-to-crypto service. The episode serves as a precedent, and a warning to users that the law is reaching into new areas.