Mixers are a hotbed for money laundering because they allow users to obfuscate bitcoin transactions, attracting the likes of tax dodgers and criminals seeking to conceal the proceeds of illicit activities.

A mixer is a service that will mix your bitcoin with other users’ bitcoin and return a different quantity of bitcoins for a charge. Perhaps you read recently about the TornadoCash crackdown by the American government. In order to conceal Ethereum transactions, the TornadoCash app was created. Traders and others who wanted to preserve their privacy have utilized it, but it has also attracted the attention of government officials. The reason is due to the fact that the Lazarus Group, an infamous state-sponsored team of hackers from North Korea, were using it to launder money. It’s not clear how this was considered ‘laundering’ since they were operating under the full support of their government and thus, not breaking the laws of their nation.

By scrambling various cryptocurrency channels, Tornado Cash makes it difficult to identify the source of each transaction. Therefore, anonymity is preserved. The United States government recently sanctioned the open-source code that makes up the Tornado Cash privacy protocol. Of course, US law is very different from Swiss law when it comes to a citizen’s privacy, where financial privacy is a constitutional right.

The fundamental principle behind Bitcoin mixers is that privacy is a human right and that no government or individual should be able to assert their will on a free individual. By this reasoning, the assault on tumblers like Tornado Cash are unconstitutional. Governments are human constructs, not divine, and they are only legitimized by popular opinion and the rule of law as it exists at that time and place. According to some users of BTC tumblers, appeals to law and authority themselves do not make a government valid, however.

They would argue that we no longer give credence to ancient Mesopotamian legal structures, or those of other nations who are not our allies, for instance, but does that mean that the substrate of reason on which these were built are completely erroneous? By what metric? We do not recognize claims of our enemies or even those whose epistemology and belief system are radically different from our own. We would scoff to think that these competing power structures had the right to rule over us or sermonize about how we ought to live.

For this reason, many individuals feel the same way about the laws of the nations where they live, and they pine for the laws and views of other nations. Still, tumbling cryptocurrency is considered by some as being more about an individual’s right to do with a digital asset what they like, without revealing it to others.

Imagine one’s employer pays employees in Bitcoin. The nature of the blockchain means that it would be relatively simple to figure out how much a colleague gets paid, and where he or she trades or stores their Bitcoin. A BTC tumbler allows them to mix the transaction into a host of others and therefore supports their right to privacy and anonymity.

By either depositing or withdrawing tokens from a Bitcoin mixer, the linkage between that address and the new one is severed. There are exceptions to this rule. When users receive a mixture of funds from other mixer’s users, if one user was dumping way more coins or tokens into the mixer compared with other users, they will most likely have large chunks of their own money in return, since there are only so many permutations to mix and distribute tokens throughout the userbase. In theory, this vulnerability makes it possible to┬átrace the funds back to the original sender under these circumstances.

At the time of this writing, TornadoCash is no longer operational on the frontend, but the code has been reported as working since once something is deployed on the Ethereum blockchain, there’s no way to undo it. What this means for the future of crypto mixers remains to be seen, but it will probably always be a struggle between technology and legal systems still trying to catch up with the evolution of digital currency and its use.