Europol has announced that it has shut down cryptocurrency mixing platform ChipMixer. She is accused of having participated in the laundering of several billion euros.
It’s the end for ChipMixer. The platform was shut down on March 15, 2023 by German and US authorities, Europol announced. ChipMixer was not just any platform: it is accused by the police of having allowed the laundering of 2.73 billion euros since 2017. In the operation, Europol seized 1909.4 bitcoins, or 44.2 million euros, 7TB of data, and 4 servers.
This is a big catch for the European police: they suspect that some of the most famous hacker groups regularly used ChipMixer, such as Lockbit or Dharma. In particular, the gangs used the platform to launder the ransom payments they received through their ransomware.
Billions of euros laundered with ChipMixer
The investigation by the German and American authorities shows that ChipMixer would have been used to launder a total of 152,000 bitcoins, or nearly 2.73 billion euros at current prices. The vast majority of funds came from dark web markets, ransomware groups, trafficking in illegal goods, child pornography, and stolen cryptocurrencies “. It was particularly the dismantling in April 2022 of Hydra Market, a very popular market on the dark web, which allowed investigators to trace ChipMixer. The latter would have discovered, thanks to information from the site, several transactions equivalent to millions of euros.
Europol also says it is investigating the possibility that some crypto “ stolen after major crypto exchange went bankrupt in 2022 would have been laundered on ChipMixer. The press release does not specify which exchange it is, but everything suggests that it is about FTX. The site, which was considered one of the safest cryptocurrency exchanges in the world, went bankrupt spectacularly in November 2022.
The demise of the platform is due to very poor management on the part of the founder, Sam Bankman-Fried. But, it was also revealed that during the FTX collapse, $372 million was allegedly missing in a hack — so ChipMixer might be linked to laundering some of that sum.
What is ChipMixer?
ChipMixer, launched in 2017, had the particularity of being accessible on the classic web and on the dark web. The protocol made it possible to scramble the traces of the transactions made, while guaranteeing to the users that they could recover their money. More precisely, ” the funds deposited were transformed into ‘chips’, small tokens of similar value, which were then mixed together, anonymizing all transactions “, explains Europol.
The protocol software thus allowed hackers to cover their tracks and avoid being worried by the authorities. The bitcoins they had stolen or obtained illegally were therefore laundered, and thanks to ChipMixer, they could once again be traded on legal platforms or exchanged for dollars.
According to Europol, ChipMixer was a “ unregulated cryptocurrency mixer protocol “. But, there are several mixing protocols on the Internet: the practice in itself is not necessarily illegal, although it is in a gray area of law. Mixer protocols are used to scramble the traces of crypto transactions: on a blockchain, exchanges are usually viewable by everyone.
Mixer protocols in the sights of the authorities
For some, mixer protocols make it possible to respect the privacy of users. But, for the authorities, mixers are above all tools that allow hackers and cybercriminals to cover their tracks. These became more and more controversial with each new hack. The American police ended up launching an offensive in the summer of 2022 against Tornado, which was the most important of the web’s mixing protocols ” classic », by shutting down the site.
US authorities accused Tornado of laundering $7 billion. However, its closure raised a wave of dissatisfaction from its average users and privacy advocates. As for the illegal activities of ChipMixer, they have been proven, and the context is very different from that of Tornado. But it is obvious that its closure still risks weakening mixer protocols – even those operating legally.
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