Difference between revisions of "Mixing service"

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Mixes ones funds with others with the intention to confuse the trail back to the original source of the funds.
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A mixing service can be used to mix one's funds with others', with the intention of confusing the trail back to the funds' original source. In traditional financial systems, the equivalent would be moving funds through banks located in countries with strict bank-secrecy laws, such as the Cayman Islands, the Bahamas and Panama<ref>[http://en.wikipedia.org/wiki/Offshore_bank Offshore bank]</ref>.
  
Compared to the traditional financial systems this service might be the equivalent of moving funds through banks located in countries that have strict bank-secrecy laws. Such countries include the Cayman Islands, the Bahamas, and Panama<ref>[http://en.wikipedia.org/wiki/Offshore_bank Offshore bank]</ref>.
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Mixing helps protect privacy, but can also be used for money laundering - mixing illegally obtained funds. After laundering, the funds appear legitimate<ref>[http://en.wikipedia.org/wiki/Money_laundering Money laundering]</ref>. Mixing large amounts of money may be illegal, being in violation of [[Wikipedia:Structuring|anti-structuring laws]].
  
Mixing helps protect privacy however mixing can also be used for money laundering.
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There has been at least one incident where a Bitcoin exchange has blacklisted "tainted" deposits descending from stolen bitcoins<ref>[http://bitcointalk.org/index.php?topic=73385.0 Mt Gox thinks it's the Fed. Freezes acc based on "tainted" coins.]</ref>. Manual or lightly automated mixing methods can make detection of taint more difficult unless the exchange follows the trail<ref>[http://bitcointalk.org/index.php?topic=79079.0 Blockchain-based betting services function as mixing services?]</ref>, but this approach does protect privacy like a true mixing service would.
 
 
The term money laundering refers to the practice where this mixing is performed because the funds are illegally obtained.  After laundering, the funds appear legitimate<ref>[http://en.wikipedia.org/wiki/Money_laundering Money laundering]</ref>.
 
 
 
Mixing large amounts of money may itself be illegal, being in violation of [[Wikipedia:Structuring|anti-structuring laws]].
 
 
 
There has been in Bitcoin's history the situation where an exchange has blacklisted bitcoin deposits due to them having taint and descending from bitcoins that were stolen<ref>[http://bitcointalk.org/index.php?topic=73385.0 Mt Gox thinks it's the Fed. Freezes acc based on "tainted" coins.]</ref>. Unless the exchange follows the trail, manual or lightly automated mixing methods can make detection of taint more difficult<ref>[http://bitcointalk.org/index.php?topic=79079.0 Blockchain-based betting services function as mixing services?]</ref> even though this approach does protect privacy like a true mixing service would.
 
  
 
==See Also==
 
==See Also==

Revision as of 18:17, 27 November 2012

A mixing service can be used to mix one's funds with others', with the intention of confusing the trail back to the funds' original source. In traditional financial systems, the equivalent would be moving funds through banks located in countries with strict bank-secrecy laws, such as the Cayman Islands, the Bahamas and Panama[1].

Mixing helps protect privacy, but can also be used for money laundering - mixing illegally obtained funds. After laundering, the funds appear legitimate[2]. Mixing large amounts of money may be illegal, being in violation of anti-structuring laws.

There has been at least one incident where a Bitcoin exchange has blacklisted "tainted" deposits descending from stolen bitcoins[3]. Manual or lightly automated mixing methods can make detection of taint more difficult unless the exchange follows the trail[4], but this approach does protect privacy like a true mixing service would.

See Also

References