Crypto Mixers and Recent Crypto Hacks

On Feb. 21, 2025, around $1.5 billion in ETH was stolen from the Bybit exchange. Elliptic analytics suggest the funds were probably taken by the infamous Lazarus Group and were likely sent to crypto mixers for laundering. Thieves who stole crypto from Infini the following day also used a mixer service. What does the future hold for crypto mixers in pro-crypto countries?

Table of Contents

• Crypto mixers used by thieves after two major hacks
• Debate over the legitimacy of crypto mixers
• Will pro-crypto governments ban crypto mixers?

Crypto Mixers Used by Thieves After Two Major Hacks

According to a report by Elliptic, the Bybit hack ranks as the largest heist ever, not just within crypto exchange hacks. Typically, such incidents involve the layering of stolen funds through decentralized exchanges, swapping services, or crypto mixers like Tornado Cash and Cryptomixer.

Two hours post-hack, 400,000 ETH taken from Bybit were distributed among around 50 addresses, with 10% of these wallets emptied by February 23. Further actions may include transactions like swapping, using cross-blockchain bridges, and mixers. Elliptic highlights the anonymous exchange eXch as a key tool in laundering the Bybit hack’s funds.

Following the Bybit incident, $50 million in USDC was stolen from the Infini platform, with Tornado Cash used to conceal the transaction details. Funds from January’s multi-million hack of the Phemex exchange also reportedly went through a Tornado Cash mixer.

Debate Over the Legitimacy of Crypto Mixers

Blockchains like Bitcoin and Ethereum maintain transparent transaction records. Therefore, criminals using these chains often turn to crypto mixers to obfuscate their activities.

While crypto mixers can facilitate illicit financial activities, many users seek privacy for legitimate reasons and view these tools positively. However, the ongoing misuse by criminals leads to scrutiny of mixers. Some, like Bitcoin Fog, have aided in laundering vast quantities of funds, with significant legal repercussions for their operators.

Tornado Cash has also faced legal challenges, with team members arrested for alleged involvement in large-scale money laundering tied to the Lazarus Group. Developer Alexey Pertsev’s case has sparked debate around the legal treatment of privacy-focused technologies. The crux of the issue is whether developers should be held accountable for the misuse of open-source code.

Will Pro-Crypto Governments Ban Crypto Mixers?

The future of crypto mixers remains uncertain. Some countries in the EU, such as France and the Netherlands, are enacting bans, while the U.S. is leaning towards a more permissive approach following the lifting of sanctions against Tornado Cash.

Despite some progress, the challenges continue as crypto mixers assist cybercriminal activities. Developers, like those behind Railgun, seek to balance private transactions with crime-fighting, although such platforms have been exploited too.

In summary, the upcoming landscape will likely see diverging paths: some nations may uphold a lenient stance toward crypto mixers while others tighten regulations tightly. The conversation around privacy coins and mixers remains pivotal in achieving broader cryptocurrency adoption.