While on-chain activity has slowed during the cryptocurrency winter, the use of cryptocurrency mixers has doubled in 2022, with addresses listed as "illegal" being the largest users of mixers.
A cryptocurrency mixer (mixer or tumbler) that provides anonymity to transactions, making the sender or receiver of the transaction completely unidentifiable. While this is a valid use case for everyday users, hackers often exploit mixers to evade regulatory investigations.
In a report by analytics firm Chainalysis, data showed that the 30-day moving average of the total daily value received by cryptocurrency mixers reached an all-time high of $51.8 million in April 2022. This amount is double the number received at the same time in 2021.
According to the company, almost 10% of funds from illicit addresses were sent exclusively to cryptocurrency mixers. Additionally, data from Q2 2022 shows that funds sent to mixers via illicit addresses came from stolen funds and scam shops.
While mixers are not inherently illegal, that could change as regulators start to look at how to bring regulation into the space. In March, the U.K.’s National Crime Agency (NCA) said it was seeking to regulate cryptocurrency mixer services, requiring them to comply with laws related to anti-money laundering.
In May, cryptocurrency exchange Blender.io was sanctioned by the U.S. Treasury Department for its connection to the Axie Infinity hack that resulted in the theft of $620 million in digital assets. Under the sanctions, all assets of the mixer in the U.S. will be blocked and must be reported, the government agency said.
Meanwhile, Tornado Cash, another controversial mixer, open-sourced its user interface code in early July. According to its developers, the move is aimed at fulfilling its promise of complete decentralization and transparency.
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