The latest closure of a crypto mixing service follows on the sanctioning of the privacy-focused Tornado Cash mixer and arrest of one of its lead developers.
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In a coordinated operation, U.S. and Germany law enforcement shuttered the ChipMixer Bitcoin anonymizer — seizing $46 million in digital assets and indicting its alleged operator.
Minh Quốc Nguyễn of Hanoi, Vietnam, was charged in Philadelphia with money laundering, operating an unlicensed money transmitting business and identity theft, the U.S. Department of Justice said. He has not been arrested.
The international operation "disabled a prolific cryptocurrency mixer, which has fueled ransomware attacks, state-sponsored crypto heists and darknet purchases across the globe," said Deputy Attorney General Lisa Monaco. "Cybercrime seeks to exploit boundaries, but the Department of Justice's network of alliances transcends borders and enables disruption of the criminal activity that jeopardizes our global cybersecurity."
U.S. and German authorities participated, as did the EU's Europol police agency. Along with 1,909 BTC, the operation seized servers with 7TB of data, Europol said.
The operation comes in the wake of the imposition of U.S. sanctions on the Tornado Cash and Blender.io mixing services, and the arrest in the Netherlands of Tornado Cash developer Alexey Pertsev on money laundering charges for having helped build the decentralized finance (DeFi) service.
Crooks or Privacy?
Calling ChipMixer one of the "most widely used mixers to launder criminally derived funds," the DoJ suggested that it was more focused on criminal activities than other mixing services, which help anonymize cryptocurrency by mixing large groups of tokens together and then distributing them randomly to users.
That said, Nguyễn did use rhetoric common to the privacy-focused users of crypto mixers, who say the vast majority of users are not criminals.
Speaking about the anti-money laundering and Know Your Customer requirements of banking laws around the globe, Nguyễn reportedly said:
"AML/KYC is a sellout to the banks and governments."
Since August 2017, ChipMixer "attracted a significant criminal clientele and became indispensable in obfuscating and laundering funds from multiple criminal schemes," the DoJ said. It pointed to North Korean hackers, Russian military intelligence and darknet sellers of drugs and other illicit products.
The DoJ cited the laundering of $17 million in ransomware funds, $35 million from "fraud shops" that sell hacked data and stolen credit cards, and $200 million from darknet market sellers, as well as its use by the Russian Army's GRU intelligence agency.
Beyond that, it was used to launder $700 million in hacked funds "related to heists by North Korean cyber actors from Axie Infinity's Ronin Bridge and Harmony's Horizon Bridge," which netted $625 million and $100 million, respectively.
Which is less than $1 billion, rather than the $3 billion cited.
Still, the DoJ's perspective on mixing services is clear. U.S. Attorney Jacqueline Romero of the Eastern District of Pennsylvania said:
"Platforms like ChipMixer, which are designed to conceal the sources and destinations of staggering amounts of criminal proceeds, undermine the public's confidence in cryptocurrencies and blockchain technology… We cannot and will not allow criminals' exploitation of technology to threaten our national and economic security."
