As on-chain activities slow down during the crypto winter, usage of cryptocurrency mixers has doubled in 2022, with addresses classified as “illicit” being the top contributor.
Cryptocurrency mixers, also called “tumblers,” provide anonymity to transactions, making the sender or receiver of the transaction completely unidentified. While this has a valid use case for everyday users, hackers have used it to hide from authorities.
In a report by analytics firm Chainalysis, data shows that the 30-day moving average of the total daily value received by crypto mixers reached a new all-time high of $51.8 million in April 2022. The amount is double the incoming volume received at the same time in 2021.
According to the firm, almost 10% of all funds coming from illicit addresses are sent exclusively to crypto mixers. Additionally, data from the second quarter of 2022 shows that funds sent to mixers by illicit addresses come from stolen funds and fraud shops.
While mixers are not illegal in nature, this might change as regulators have started to look into ways to bring regulation to this area. In March, the United Kingdom’s National Crime Agency (NCA) expressed that it’s seeking to regulate coin mixers to comply with laws related to Anti-Money Laundering.
In May, crypto mixer Blender.io was sanctioned by the United States Treasury because of its part in the infamous Axie Infinity hack, where $620 million in digital assets were stolen. The government agency noted that under the sanctions, all of the mixer’s properties in the United States will be blocked and must be reported.
Meanwhile, Tornado Cash, a controversial crypto mixer at the center of some decentralized finance (DeFi) exploits, open-sourced its user interface code earlier in July. According to its developers, the move aims to meet its commitment to being fully decentralized and transparent.