Cryptocurrency Tumbler Scams
Author: James Greening
Anonymity is one of the biggest appeals of cryptocurrency as the blockchain allows financial transactions to be carried out without them being tied to real identities. However, cryptocurrencies such as Bitcoin and Ethereum feature publicly visible registers of every transaction carried out on the blockchain making crypto transactions traceable.
Despite crypto transactions being virtually anonymous, there are still ways to track down an individual using a wallet address - although it is a long and tedious process. Crypto developers have devised a way to further obscure transactions to make them practically impossible to trace to the original wallet. This is done by using Cryptocurrency Tumblers which are also popularly known as Bitcoin Mixers or Bitcoin Blenders.
What are Cryptocurrency Tumblers?
The goal of a crypto tumbler is to remove all associations between the coin’s original exchange and the final exchange to which it is moved. Cryptocurrency tumbling can be seen as a controversial practice as it is similar to what most money laundering operations do using fiat money.
A cryptocurrency tumbler or cryptocurrency mixer works by pooling together funds from numerous sources. The funds are held for a long and random period of time before being sent back out in small amounts to destination addresses. Crypto tumblers help in maintaining anonymity as the funds are pooled together and then distributed at random times. Users are charged a percentage fee for availing of the service.
There are no laws expressly prohibiting the mixing of cryptocurrency. However, crypto tumbling services also have been known to be used for money laundering by criminals and they are often viewed as aiding illegal tax avoidance.
Risks of Using Cryptocurrency Tumblers
Sending cryptocurrency to strangers is always a risk and there is no way of knowing whether a cryptocurrency tumbler service is truly genuine. Even a service that appears legitimate today may shut down tomorrow and steal users’ crypto without facing any consequences. It might be wise to consider that there is always a risk of getting scammed while attempting to mix your crypto coins. You also might never know how well a mixer actually is at hiding the transaction trail. It might not mix coins better than forensics crews can track them.
Cryptocurrency Tumbler Scams
As the crypto space is largely unregulated, anyone can start their own website and offer crypto tumbler services, including scammers. Here are a couple of Cryptocurrency Tumbler Scams that you should be aware of.
Fraudulent Crypto Tumblers
The most common crypto tumbler scam involves the age-old scammer tactic of taking money under false pretences and running away with it. Scammers set up fake crypto mixing sites and contact victims with fake investment schemes.
According to Scam-Alert.io, the CryptoMixer tumbler scam is the fifth biggest earning cryptocurrency scam at the time of writing this article, pulling in $2,576,622 in Bitcoin for the scammers. CryptoMixer was a fake Bitcoin mixing service that sent out the coins meant for tumbling right into the wallets of scammers on several big exchanges.
Clone Sites
Searching for crypto mixing services online will pull up a number of different platforms to choose from. However, you need to be careful as many of these are copycat clones of ‘genuine’ mixing services Bitblender (bitblender.io), CryptoMixer (cryptomixer.io), CoinMixer, (coinmixer.se) and more, many of which have shut down and/or turned out to be scams. These clone sites have been reported to not return the coins to the intended recipient and they have no customer support to speak of.
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