While Chainalysis acknowledges that not all mixers users are necessarily criminals, as some may need them to make anonymous transactions under oppressive governments, such obfuscation tools can be a real pain in the neck for blockchain investigators.
“However, mixers’ core functionality, combined with the fact that mixers rarely if ever ask for KYC information, makes them naturally attractive to cybercriminals. In fact, nearly 10% of all funds sent from illicit addresses are sent to mixers — no other service type cracked a 0.3% mixer sending share,” the report adds.
According to Chainalysis, in 2022, mixers received more cryptocurrency than ever, with the funds coming from centralized exchanges, DeFi protocols, and most notably, addresses connected to illicit activity. The share of value sent to mixers from illicit addresses grew mostly due to the activity of sanctioned entities, namely the Russian darknet market Hydra and North Korean Lazarus Group, responsible for the $625m Axie Infinity exploit.
Coin mixers, also known as tumblers, mix users’ crypto in a large pile of other cryptocurrencies and then return funds in small portions minus 1-3% fee. Chainalysis, however, claims that such services will soon become obsolete as the company continues to work on its ability to demix certain transactions and trace the source of funds.