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posted by martyb on Wednesday August 02 2017, @05:18PM   Printer-friendly
from the shake-it-up-baby dept.

BitMixer, the world's most popular Bitcoin mixing service has announced last weekend it was shutting down operations effective immediately.

Bitcoin mixing is a process of taking money from one account and breaking it into hundreds or thousands of smaller transactions to transfer it to another account.

For years, it was believed that Bitcoin mixing is a safe way to transfer funds anonymously from one account to another, mainly because there was no technology to track all the transactions and reveal the destination account.

In a statement, the BitMixer owners said they were shutting down the service after realizing that Bitcoin was a "transparent non-anonymous system by design."

[...] "Blockchain is a great open book. I believe that Bitcoin will have a great future without dark market transactions. You may use Dash or Zerocoin if you want to buy some weed. Not Bitcoin," the BitMixer team wrote.

"I hope our decision will help to make Bitcoin ecosystem more clean and transparent. I hope our competitors will hear our message and will close their services too. Very soon this kind of activity will be considered as illegal in most of countries," the team also wrote, issuing a warning for fellow Bitcoin mixers.

Source: https://www.bleepingcomputer.com/news/technology/internets-largest-bitcoin-mixer-shuts-down-realizing-bitcoin-is-not-anonymous/


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  • (Score: 4, Informative) by frojack on Wednesday August 02 2017, @05:38PM (16 children)

    by frojack (1554) on Wednesday August 02 2017, @05:38PM (#548016) Journal

    Wait, I thought everyone knew the history of a bitcoin was traceable through the block-chain all the way back to inception. Did they build their entire business model on a misunderstanding or failure to RTFM.

    Or was I mistaken?

    Bitcoin's privacy properties are a kind of paradox: Every Bitcoin transaction that occurs in the entire payment network is recorded in the "blockchain," Bitcoin's decentralized mechanism for tracking who has what coins when, and preventing fraud and counterfeiting. But the transactions are recorded only as addresses, which aren't necessarily tied to anyone's identity--hence Bitcoin's use for anonymous and often illegal applications.

    But tracing those addresses is not impossible. http://cseweb.ucsd.edu/~smeiklejohn/files/imc13.pdf [ucsd.edu]

    --
    No, you are mistaken. I've always had this sig.
    • (Score: 3, Insightful) by maxwell demon on Wednesday August 02 2017, @06:16PM (2 children)

      by maxwell demon (1608) on Wednesday August 02 2017, @06:16PM (#548032) Journal

      Moreover the whole Bitcoin mixing business only makes sense because Bitcoin transactions are not anonymous. So they claim they didn't know the very fact that is at the base of their business?

      --
      The Tao of math: The numbers you can count are not the real numbers.
      • (Score: 0) by Anonymous Coward on Wednesday August 02 2017, @10:53PM

        by Anonymous Coward on Wednesday August 02 2017, @10:53PM (#548149)

        So they claim they didn't know the very fact that is at the base of their business?

        Are you saying that they were PHBs and MBAs?

      • (Score: 2) by FatPhil on Thursday August 03 2017, @08:47AM

        by FatPhil (863) <{pc-soylent} {at} {asdf.fi}> on Thursday August 03 2017, @08:47AM (#548267) Homepage
        However, doesn't mixing taint every transaction that involves portions of the payment used for an illegal (say silk road drugs) transaction. Which makes that transaction illegal. Which taints all of the bitcoins used for that transaction. And so on, until basically the whole bitcoin pool is tainted, and everything purchased with bitcoins.

        Civil forfeiture can then go wild.

        (And whilst that would be terrible, it would also be hilarious.)
        --
        Great minds discuss ideas; average minds discuss events; small minds discuss people; the smallest discuss themselves
    • (Score: 1, Funny) by Anonymous Coward on Wednesday August 02 2017, @06:17PM (10 children)

      by Anonymous Coward on Wednesday August 02 2017, @06:17PM (#548033)

      Sadly, the people who propel society to ever greater heights are usually the people who have no idea what they're doing.

      • (Score: 2) by Grishnakh on Wednesday August 02 2017, @06:59PM (8 children)

        by Grishnakh (2831) on Wednesday August 02 2017, @06:59PM (#548057)

        “The reasonable man adapts himself to the world: the unreasonable one persists in trying to adapt the world to himself. Therefore all progress depends on the unreasonable man.” - George Bernard Shaw

        Sometimes the unreasonable people know what they're doing, and accomplish great things. Other times, the unreasonable people have no clue what they're doing, but are good at getting people to go along with their idiotic ideas; Trump is a good example of this one. Sometimes, the unreasonable people are actively malevolent and really good at lying, and also at getting people to follow them. This is generally how religions get started, with L. Ron Hubbard, Joseph Smith, Jim Jones, and David Koresh being good examples.

        • (Score: 0) by Anonymous Coward on Wednesday August 02 2017, @07:10PM (6 children)

          by Anonymous Coward on Wednesday August 02 2017, @07:10PM (#548063)

          Trump is the sand in the unreasonable machinery.

          • (Score: 1, Informative) by Anonymous Coward on Wednesday August 02 2017, @08:20PM (5 children)

            by Anonymous Coward on Wednesday August 02 2017, @08:20PM (#548098)

            Its so easy to blame others for the faults and stupidity in your country. American PEOPLE elected your president, not aliens from a distant galaxy. Reap what ye have sown.

            • (Score: 2) by tangomargarine on Wednesday August 02 2017, @08:48PM (4 children)

              by tangomargarine (667) on Wednesday August 02 2017, @08:48PM (#548109)

              *I* didn't sow it, and neither did 53.9% of other voters.

              American PEOPLE elected your president

              Hey, at least give the Electoral College some credit for fucking things up, too.

              --
              "Is that really true?" "I just spent the last hour telling you to think for yourself! Didn't you hear anything I said?"
              • (Score: -1, Flamebait) by Anonymous Coward on Wednesday August 02 2017, @11:09PM

                by Anonymous Coward on Wednesday August 02 2017, @11:09PM (#548153)

                Bigot!

              • (Score: 2) by Grishnakh on Thursday August 03 2017, @06:07AM (2 children)

                by Grishnakh (2831) on Thursday August 03 2017, @06:07AM (#548241)

                That's just BS. Trump was elected because of the way the electoral college system works, but the voters (all of them) are still at fault here, because they never demanded their elective representatives to change that horrible system. This isn't the first time this has happened, and the last time wasn't that long ago, it was in 2000 with Gore and Bush. Did the voters get outraged and demand the system finally be changed? Nope, they re-elected Bush instead.

                The parent is right: the American PEOPLE elected Trump, and the rest of the government, and are entirely to blame for everything that's wrong.

                • (Score: 1, Touché) by Anonymous Coward on Thursday August 03 2017, @06:42AM

                  by Anonymous Coward on Thursday August 03 2017, @06:42AM (#548248)

                  but the voters (all of them) are still at fault here, because they never demanded their elective representatives to change that horrible system.

                  So what about the people who did?

                • (Score: 2) by tangomargarine on Thursday August 03 2017, @03:56PM

                  by tangomargarine (667) on Thursday August 03 2017, @03:56PM (#548404)

                  You seem to really have a problem with blaming the entire population bar none for things that are the fault of a subset of them.

                  Maybe cut back on the absolutes a bit.

                  --
                  "Is that really true?" "I just spent the last hour telling you to think for yourself! Didn't you hear anything I said?"
        • (Score: 2) by JoeMerchant on Thursday August 03 2017, @02:56AM

          by JoeMerchant (3937) on Thursday August 03 2017, @02:56AM (#548203)

          And the cool thing about a population of Billions is that the successes can replicate and endure while most of the failures just fade away.

          Also stated as: "Even a blind squirrel finds a nut sometimes, and if you have enough blind squirrels...."

          --
          🌻🌻 [google.com]
      • (Score: 2) by kaszz on Wednesday August 02 2017, @07:15PM

        by kaszz (4211) on Wednesday August 02 2017, @07:15PM (#548066) Journal

        Or rather people that researched the current model of how things are done (RTFM) and found flaws or opportunities not yet explored sufficiently. And thus knew enough what they were doing and had the insight to be unreasonable within a specific domain with those that didn't get it.

    • (Score: 2) by JoeMerchant on Wednesday August 02 2017, @10:38PM (1 child)

      by JoeMerchant (3937) on Wednesday August 02 2017, @10:38PM (#548143)

      Amazingly, no - for a period of time around 2013, I tried, really tried to convince any number of "internetz expurtz" that bitcoin was never, and will never be anonymous due to its design. Never did I hear anyone back me up, always did I hear: "nah, man, it's just too hard, the cops will never figure it out."

      --
      🌻🌻 [google.com]
      • (Score: 2) by linkdude64 on Thursday August 03 2017, @12:35AM

        by linkdude64 (5482) on Thursday August 03 2017, @12:35AM (#548183)

        "the cops will never figure it out."

        I work in industrial automation, with industrial automation technicians and engineers. Even they fail to understand the implications of automation from a perspective of privacy.

  • (Score: 5, Insightful) by bradley13 on Wednesday August 02 2017, @05:39PM (4 children)

    by bradley13 (3053) on Wednesday August 02 2017, @05:39PM (#548017) Homepage Journal

    How is this not obvious? The only anonymity BTC offers is the lack of any documentation saying which real person owns which wallet. Tracking transactions between wallets is what the blockchain does.

    --
    Everyone is somebody else's weirdo.
    • (Score: 5, Insightful) by RamiK on Wednesday August 02 2017, @05:53PM (3 children)

      by RamiK (1813) on Wednesday August 02 2017, @05:53PM (#548023)

      I don't know about what's obvious or not. But regarding the plausible, I suspect they received a certain letter from a certain government agency and decided to shutdown rather than comply.

      --
      compiling...
      • (Score: 1) by mayo2y on Wednesday August 02 2017, @06:20PM (1 child)

        by mayo2y (6520) on Wednesday August 02 2017, @06:20PM (#548034)

        Obviously mixing will make transactions harder to follow but I've long suspected that it would not be sufficient to stop a 3 letter agency. Ultimately each and every transaction is recorded in the ledger. Is it difficult to unravel? Yes, at first. But one could surmise that it wouldn't take too long before tracking algos caught up with the mixers.

        But you may be correct. It may be a simple as a stop-or-else warning. And who wants to take on the NSA and the IRS and ... everyone else.

        • (Score: 3, Interesting) by WillR on Wednesday August 02 2017, @08:07PM

          by WillR (2012) on Wednesday August 02 2017, @08:07PM (#548091)
          My favorite bitcoin conspiracy theory has always been that is was created by the NSA. It's almost like it was designed to be hard for individuals/corporations/small nations to de-anonymize, but easy for someone with packet captures of the whole internet and near unlimited storage to pick out who was involved in an "interesting" transaction.
      • (Score: 2) by kaszz on Wednesday August 02 2017, @07:12PM

        by kaszz (4211) on Wednesday August 02 2017, @07:12PM (#548065) Journal

        But.. but I thought everybody liked letter friends? :p

  • (Score: 5, Interesting) by EvilSS on Wednesday August 02 2017, @06:32PM (5 children)

    by EvilSS (1456) Subscriber Badge on Wednesday August 02 2017, @06:32PM (#548044)
    Translation: We don't want to end up arrested for facilitating of money laundering and other illegal activities.

    Even if that was never their intent, it would not be hard for a government to make the case that they were doing just that. Best get out while they are still free.
    • (Score: 2) by JNCF on Wednesday August 02 2017, @07:55PM

      by JNCF (4317) on Wednesday August 02 2017, @07:55PM (#548090) Journal

      Yup. There will still be mixers, they'll just need to be careful about getting doxxed.

    • (Score: 2) by JoeMerchant on Wednesday August 02 2017, @10:40PM

      by JoeMerchant (3937) on Wednesday August 02 2017, @10:40PM (#548146)

      Also: check the audit trail and see how much they managed to siphon before shutting down.

      Mens rea for laundering is writ large on their business plan, I can't imagine a plausible defense that would let them operate long term.

      --
      🌻🌻 [google.com]
    • (Score: 2) by Immerman on Thursday August 03 2017, @03:16PM (2 children)

      by Immerman (3985) on Thursday August 03 2017, @03:16PM (#548391)

      >Even if that was never their intent...

      Exactly wat service do mixers offer *except* money laundering?

      • (Score: 2) by EvilSS on Thursday August 03 2017, @05:53PM (1 child)

        by EvilSS (1456) Subscriber Badge on Thursday August 03 2017, @05:53PM (#548442)
        Well I'm sure they would argue that it was a "privacy" service for the tinfoil hat brigade who want to obfuscate their perfectly legally obtained and spent coins, and it's technically valid use*. However in practice I'm sure it's probably the least statistically significant use of their service.

        *I am not going out on a limb and say it's a legal use, no matter how legit some of the users may be. But it's a use that wasn't intended to be money laundering in the strictest sense. Also not saying that the owners never intended it to be used for illicit purposes either, because let's face it, that's probably where 99.999999% of their business by volume was coming from and unless they are complete idiots they knew it.
        • (Score: 2) by Immerman on Friday August 04 2017, @01:38AM

          by Immerman (3985) on Friday August 04 2017, @01:38AM (#548546)

          Now I'm wondering just how specific the laws against money-laundering are - I could easily see them being worded such that the obfuscation itself was illegal, irrespective of the origin of the money stream being obfuscated.

  • (Score: 0) by Anonymous Coward on Wednesday August 02 2017, @07:25PM (10 children)

    by Anonymous Coward on Wednesday August 02 2017, @07:25PM (#548072)

    "Very soon this kind of activity will be considered as illegal in most of countries".

    i don't understand. if bitcoins are illegal in a country then obviously "remixing" them is too.
    however if bitcoins are NOT illegal, then how can a "remixing" become illegal?

    • (Score: 3, Informative) by EvilSS on Wednesday August 02 2017, @08:11PM

      by EvilSS (1456) Subscriber Badge on Wednesday August 02 2017, @08:11PM (#548094)
      Simple answer: Money laundering. Mixers provide a way to "clean" bitcoins obtained via illegal means by trying to obfuscate their origins. Now, I'm sure you or someone will come up with some technical reason why this can't possibly be considered money laundring, but before you reply ask yourself: Will it fly in a court with the full force of a US District Attorney or similar law enforcement official from another country prosecuting it?
    • (Score: 2) by DannyB on Wednesday August 02 2017, @08:11PM (4 children)

      by DannyB (5839) Subscriber Badge on Wednesday August 02 2017, @08:11PM (#548095) Journal

      if bitcoins are NOT illegal, then how can a "remixing" become illegal?

      If dollars are not illegal, then how can laundering them through your hotel properties and real estate ventures become illegal?

      The answer is that dollars may be legal, but how they came into your hands, from, say, Russian hands, could be a problem.

      Bitcoin laundering could be illegal if the TLAs can identify which bitcoin wallets go with certain individual persons smoking things [postimg.org] not currently in favor with the present administration.

      --
      Santa maintains a database and does double verification of it.
      • (Score: 1) by nnet on Wednesday August 02 2017, @08:25PM (1 child)

        by nnet (5716) on Wednesday August 02 2017, @08:25PM (#548100)

        ...certain individual persons hiring killers....

        FTFY.

        • (Score: 0) by Anonymous Coward on Thursday August 03 2017, @01:18PM

          by Anonymous Coward on Thursday August 03 2017, @01:18PM (#548331)

          for hire: knowledge of airiel navigation. can fly a plane and know's where the bomb-bay doors are. can also remotely fly a drone ...

      • (Score: 0) by Anonymous Coward on Thursday August 03 2017, @01:11PM (1 child)

        by Anonymous Coward on Thursday August 03 2017, @01:11PM (#548325)

        ok.
        but a certain money transaction is NOT per se laundering.
        i suppose it only gets labeled as "laundering" after it has been determined that the money was in the first place
        obtained thru illegal means ... one comes before the other?
        thus, just using a "mixing service" cannot automatically be considered "laundering"; it has first to be determined(*)
        that the money was obtained illegally and the subsequent action of trying to "hide it away" gets the label "laundering"?
        furthermore, if the "mixing service" is in no way connected to the illegal operation, then they cannot be held responsible for the
        action from the other party? as a bank cannot be held responsible if a thief deposits money into one of the accounts?

        (*)throwing out the baby with the bath water in case of bitcoins, because bitcoins are harder to pin to a real-life entity and
        thus just saying everything with "bitcoin" and "mixing" is automatically "laundering".

        • (Score: 2) by EvilSS on Thursday August 03 2017, @06:00PM

          by EvilSS (1456) Subscriber Badge on Thursday August 03 2017, @06:00PM (#548446)
          Reality disagrees with your legal assessment of the situation. If the mixing service is being used to launder coins, and the government can prove that a reasonable person should know this, the owners are going to end up on the hook for facilitation. Arguments like yours rarely ever work in real life courts.
    • (Score: 2) by hemocyanin on Thursday August 03 2017, @02:59AM (3 children)

      by hemocyanin (186) on Thursday August 03 2017, @02:59AM (#548204) Journal

      Dollars aren't illegal, but structuring is. https://en.wikipedia.org/wiki/Structuring#Definition [wikipedia.org]

      Structuring is the act of parceling what would otherwise be a large financial transaction into a series of smaller transactions to avoid scrutiny by regulators or law enforcement.

      By breaking one bitcoin transaction into a bunch of small ones, "mixing" sounds suspiciously like structuring.

      • (Score: 0) by Anonymous Coward on Thursday August 03 2017, @06:46AM (2 children)

        by Anonymous Coward on Thursday August 03 2017, @06:46AM (#548249)

        Laws against structuring are nonsense to begin with, since the government shouldn't be spying on everyone's financial transactions.

        • (Score: 2) by FatPhil on Thursday August 03 2017, @08:56AM

          by FatPhil (863) <{pc-soylent} {at} {asdf.fi}> on Thursday August 03 2017, @08:56AM (#548268) Homepage
          That's as stupid as saying "government shouldn't be taxing people".
          Which is as stupid as saying "government shouldn't exist".
          Which is as stupid as saying "Somalia is a model society right now".
          --
          Great minds discuss ideas; average minds discuss events; small minds discuss people; the smallest discuss themselves
        • (Score: 0) by Anonymous Coward on Thursday August 03 2017, @03:03PM

          by Anonymous Coward on Thursday August 03 2017, @03:03PM (#548381)

          Laws against structuring are nonsense to begin with

          Try telling that to the police officer about to arrest you for it. Good luck. ;-)

  • (Score: 2) by dak664 on Thursday August 03 2017, @12:53PM (3 children)

    by dak664 (2433) on Thursday August 03 2017, @12:53PM (#548320)

    I don't follow bitcoin, but it seems the recent split was caused by the (predictable a long time ago) increasing transaction costs and delays. So bitcoin is now for large transactions, and bitcash for smaller ones. Methinks masking a large bitcoin transaction by splitting and recombining now becomes too costly.

    Even if wallets could be anonymous, the actual tokens never were and it would have been easy to block usage of stolen or laundered tokens. Apparently the ponzis don't want to do that (yet).

    • (Score: 2) by Immerman on Thursday August 03 2017, @03:23PM (2 children)

      by Immerman (3985) on Thursday August 03 2017, @03:23PM (#548394)

      Did I miss something? My understanding is that unlike some "e-money" strategies, bitcoin doesn't involve any form of tokens at all. Rather it's simply a secure and transparent method of tracking accounts and the transactions between them.

      Similarly, just because a bank account "contains" $287 doesn't mean that actual physical bills in that denomination are reserved to it (or even exist, thanks to fractional reserve banking), nor are they transferred when a check is written against it. Instead there's just a couple notations on a ledger - account A is reduced by amount X, while account B is increased by the same amount.

      • (Score: 2) by dak664 on Thursday August 03 2017, @11:36PM (1 child)

        by dak664 (2433) on Thursday August 03 2017, @11:36PM (#548519)

        As you say, transparent. My $1000 wallet receives $100 from a looted wallet - the next $100 I spend shows the world that I am a thief. No matter how finely divided into noncents.

        • (Score: 2) by Immerman on Friday August 04 2017, @01:31AM

          by Immerman (3985) on Friday August 04 2017, @01:31AM (#548541)

          Why wait for you to spend it? Every transaction is public, so the world knows you're a thief (or at least received funds from a thief) the moment you get the $100

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