The crypto mixer is said to have been used to wash funds stolen from Bybit and Infini. Do Probitcoin countries ban crypto mixers?

On February 21, 2025, approximately $1.5 billion in ETH was stolen from the Bibit exchange. Elliptic analysis says the funds were probably stolen by the infamous Lazarus group. The token may have been sent to a crypto mixer for washing. The next day, the thief who stole Crypto from Infini also used the mixer service. What will happen to the future of crypto mixers in procrypted countries?

Cryptographic mixer was used by burglars after two major crypto hacks recently

According to an Elliptic report, Bybit Hack is not only the biggest crypto exchange hack, but the biggest robber of all time. Elliptic points out that hacks, such as the recent Bibit incident, usually involve tiering of stolen funds. This may include decentralized exchanges, exchanges of services, or using crypto mixers such as Tornado Cash or Cryptomixer.

Two hours after the hack, 400,000 ETH stolen from BYBIT was distributed to around 50 addresses. As of February 23rd, 10% of these wallets are already empty. The following actions on these assets may include transactions such as swapping using cross-blockchain bridges, mixers, and more. Elliptic single singles completely anonymous exchange exchanges as the main tool for bi-bit hack money laundering at the current stage.

You might like it too: Crypto exchange denies Bibit’s washing accusations

Elliptical analysts say the final stage obfuscates the transaction via a crypto mixer. Note that the report says that this task may be required in this case because of the large amount of stolen funds.

Following the Bybit Hack, the bad actor stole $50 million on USDC from the Infini platform. The Crypto Mixer Tornado Cash was used at one point to hide the details of the actual transaction. The funds stolen in the millions of Femex exchange hacks reportedly became tornado cash mixers.

Discussion of Cryptographic Mixer Legality

Bitcoin, Ethereum, and many other blockchains make transaction records transparent. Therefore, if criminals use these blockchains, they may need a crypto mixer that obfuscates transactional data and hides from justice.

Crypto mixers are useful tools for people committing financial crimes, but in many cases they are not intended to be used only by bad actors. Many people strive to keep their transactions private. They may also look at the crypto mixer positively.

But because of the overall frustrating experience, crypto mixers are scrutinized because they are often used by criminals, even if people create them. Some crypto mixers have not stopped criminals and have not provided services for years.

One of the toughest examples is Bitcoin Fog, a mixing service that helps obfuscate transaction data of 1.2 million Bitcoin (about 5% of total supply) between 2011 and 2021. This platform was often used by criminals. As a result, Roman Sterlingef, creator of Bitcoin’s mist, was sentenced to 12 years in prison after being convicted of money laundering conspiracy, unlicensed money transfer in the District of Columbia, and other crimes.

You might like it too: Russian trio indicted in Crypto mixer money laundering case

Three members of the Tornado Cash team were arrested in the 2020s as the mixer platform was allegedly involved in a massive money laundering operation associated with the Lazarus Group. Tornado Cash developer Alexey Pertsev was released from prison in February this year, but his fight continues.

The incident sparked debate over the legal treatment of the platform, focusing on privacy. The code itself is not a crime. Pertsev has created an open source service that obfuscates transactional data on the Ethereum blockchain. He is not the owner of Tornado Cash or the person who uses it to wash his money.

Some of those commenting on the case expressed their belief that such circumstances would reveal the urgent need for new laws as crypto platforms and transactions often do not fit the framework of the traditional financial sector. The situation where developers who created open source platforms face money laundering fees indicates the urgency of more modern regulations. Laws that precede the emergence of cryptocurrencies are often too inaccurate to properly work with new technologies and the people who build them.

Privacy-centric tokens are surrounded by similar debates. For example, Monero has been discontinued from large-scale crypto exchanges that comply with many laws across multiple jurisdictions, along with other popular privacy-centered cryptocurrencies such as Dash and Zcash, and Monero has funded terrorist organizations. The importance of Monero cannot be underestimated. To some extent, it is better than Bitcoin in one market as a cryptographic choice.

Does the custody government ban crypto mixers?

The future of crypto mixers is shaky. Some privacy-centric coins and crypto mixers are prohibited in certain jurisdictions, including some of the EU countries, such as France and the Netherlands. The US could be treated more loosely as the government promoted Donald Trump’s public disapproval of the CBDC and gained privacy subcapacity.

Sanctions on tornado cash were lifted in the US in February. It was celebrated as a victory for the crypto community and the community of privacy advocates. That could be a sign that the US defends loose regulations on crypto mixers. But it’s too early to judge.

Nevertheless, as recent hacking shows, crypto mixers continue to hurdle the work of law enforcement fighting cybercriminals. Billions of codes reportedly stolen by North Korean hackers have been spent on local nuclear missile programs.

Some developers try to find the perfect balance between offering private deals and fighting criminals. The Railgun platform supported by Vitalk Buterin in 2024 is an example of a platform that seeks to adhere to this balanced approach.

However, despite Railgun’s innovative approach, Elliptic reports that the platform has been successfully used by the Lazarus Group in the past.

In general, there are two trends in the near future. The US and countries follow that step and try to leave the crypto mixer intact, while the rest of the world is particularly strict on such platforms.

You might like it too: Privacy Coins, Crypto-mixers, and Money Launderers: Bitter-drugs in mass adoption of crypto?