What is a coin mixer? How do they work?

The coin mixer attracted both attention Cryptocurrency Communities and regulators are increasing in the fight for privacy.

In 2021, the founder of coin mixer Bitcoin Fog was arrested on charges that included money laundering and operating a money transmission business without licenses.

A year later, the US Treasury issued sanctions on tornado cash. Ethereum Coin mixing service effectively prohibits Americans from using it.

In its Landmark ruling in November 2024, the US Fifth Circuit ruled that the Treasury had stepped up with the approval of Tornado Cash. Smart Contract,The broader designation remained the same.

In a reversal of the 2022 decision, the Ministry of Finance announced in March 2025 that it had registered Tornado’s cash from a list of parties approved by the Foreign Assets Control Bureau or OFAC.

But what does a coin mixer do like Tornado Cash or Bitcoin Fog? Why do people use them? In this article, we will examine the technologies behind mixers and their legal and illegal uses.

What are coin mixers and why do you use them?

Coin Mixer is a service that allows users to obfuscate the origin and destination of transactions. Users may send cryptocurrency to the service or mix it with other coins; tokenand sends an equivalent amount of “mixed” coins to the recipient address, hiding the connection between the sender and the recipient.

There are many legitimate uses for this type of service. You may not want your employer to know the details of every bank or credit card transaction you have ever made, but your employer or anyone else may not want to know all the details of every crypto transaction you have ever made.

However, as a cryptographic adoption Blockchain As tools expand, real-world identities are increasingly linked to blockchain addresses, along with all purchases, transfers, or interactions associated with bare addresses in a common transparent, distributed ledger. The coin mixer is coming in.

However, this ability to obscure wallet identity and obfuscate transactions makes coin mixers an attractive tool for cybercriminals and thus a target for law enforcement.

While politicians and law enforcement are opposed to the use of cryptocurrency in criminal businesses, coin mixers occupies a grey area between promoting money laundering and maintaining privacy rights. Due to the unauthorized and transparent nature of the blockchain, some crypto users rely on the additional privacy offered by Coin Mixers.

Privacy advocates argue that coin mixers are particularly useful and even necessary when people’s activities such as journalism, civil disobedience, and protest could put a person at risk. Because of this, they need greater privacy in crypto transactions.

Meanwhile, law enforcement and government agencies see coin mixers as a way for criminals to use cryptocurrency to wash their money.

In announcing the sanctions against Tornado Cash, the Treasury said the offenders have processed more than $7 billion in cryptocurrency since its creation in 2019, and the offenders have used Tornado Cash to wash their money.

Among these illegal funds, the Treasury said it was the total of $138.8 million stolen from a crypto-bridge service by the state-sponsored North Korean cybercriminal group Lazaro Group.

A November 2024 ruling by the U.S. Fifth Circuit Court found that the Treasury had surpassed its authority and that the unchanging smart contracts of tornado cash were “not property because they cannot be owned.” The decision overturned a lower court’s ruling, saying that protocols built on smart contracts cannot be classified as services as they operate without “human intervention.”

In March 2025, the Treasury reversed the course and removed tornado cash from the list of approved entities. “Based on the administration’s review of the legal and policy issues of the novel, raised by the use of financial sanctions on financial and commercial activities occurring within the evolving technology and legal environment, we exercised our discretion to remove the economic sanctions on tornado cash, which were reflected in the Treasury’s Monday filing.

A month later, a federal court held that the Treasury’s actions were “illegal” and permanently banned OFAC from reinstating sanctions on tornado cash. Judge Robert Pittman of the U.S. District Court for the Western District of Texas has issued an order to force the Treasury to “permanently ban” sanctions on Coin Mixers, resulting in an overwhelming victory for privacy advocates.

In July 2025, the 11th Circuit Court of Appeals dismissed an appeal filed by the Code Advocacy Group Coin Center. There, the Treasury allegedly surpassed the legal authority sanctioning tornado cash. The court granted the joint motion to invalidate the judgment with an instruction to dismiss the trial, and the parties agreed that the appeal was a “controversy” following OFAC’s March decision to remove sanctions against the coin mixer.

Example of a coin mixer

• Tornado Cash: Founded in 2019 by Alexsey Pertsev and Roman Storm, the mixer was approved in 2022 by the US Treasury Department. TornadoCash only serves the Ethereum Network and is inappropriate.
• Wallet Summer: The founder, a non-lawful Bitcoin-only mixer founded by Keonne Rodriguez and William Longergan Hill in 2015, was arrested and charged in 2024 with conspiracy to commit money laundering.
• Wasabi Wallet: Founded in 2018 by Pseudo-Anonymous Zksnacks, it uses the Zerolink protocol to create transactional privacy. Wasabi blocked US residents from using a mixer in 2024 after the founder of Samourai Wallet was arrested.
• Bitcoin Fog: Founded in 2011 by Roman Sterlingov, Bitcoin Fog was a custodial aluminium caster and held user funds in the process of mixing them. Sterlingov was convicted of money laundering in 2024.

How does a coin mixer work?

It was used before the tornado cash was removed Smart Contract Accept token deposits from one address and enable withdrawal from another address.

Other coin mixers work in a similar way, with the smart contract acting as a pool where all the deposited tokens are mixed. When funds are withdrawn from these pools, the link on the chain between the source and destination will break, anonymizing the transaction.

These types of coin mixers are usually not non-customers. This means that there is no third-party control of wallets and funds, and it is simply the creation of smart contracts.

These services are certainly neutral as they do not use intermediaries, but that means that they could be attractive tools for cybercriminals who are trying to wash stolen codes, as in the case of the Lazarus Group.

Coin Mixer: Timeline

• October 2011: Bitcoin Tumbler Bitcoin Fog will be on sale.
• December 2019: Coin Mixer tornado cash has been released.
• April 2021: The US Department of Justice has announced the arrest of Bitcoin fog operator Roman Stellingoff.
• August 2022: US Treasury sanctions Ethereum Coin Mixer Tornado Cash. A few days later, developer Alexey Pertsev was arrested in Amsterdam for money laundering fees.
• March 2024: Bitcoin fog operator Roman Starlingoff has been convicted of money laundering.
• April 2024: US authorities have accused the conspiracy to arrest, claim and commit money laundering the founder of Bitcoin mixer Samourai Wallet.
• May 2024: Wasabi Wallet has announced the preemptive closure of its mixing services, banning US customers from using it. At the same time, Phoenix Wallet pulls apps from US stores, and hardware wallet Trezor announces the cancellation of the Coin Supervision function.
• November 2024: The US Fifth Circuit provides that Tornado Cash’s immutable smart contracts cannot be classified as “property.”
• March 2025: The US Treasury Department will lift sanctions on tornado cash.
• April 2025: A US federal court judge issues an order that permanently blocks the revival of sanctions against tornado cash.
• July 2025: The US Court of Appeals has granted a joint motion to terminate the Crypto Advocacy Group Coin Center’s OFAC sanctions.

Legitimate use cases for coin mixers

Let’s say there’s a business owner and a crypto enthusiast named Robert who wants to send Ethereum to a group of hacktivists active in Ukraine. Robert doesn’t want to trace his contributions to him, so he uses a coin mixer.

Robert goes to the Coin Mixer website and deposits Ethereum that he wants to donate. The amount sent will be deposited in the mixer’s smart contract and pooled in hundreds, thousands, and even millions of other transactions already in that pool. After receiving confirmation that the deposit was successful, Robert goes to the withdrawal tab, enters the recipient’s address into the mixer, and sends Ethereum from the mixer.

Ethereum is then sent from the mix to the recipient. On the receiver, the address displayed is the address of the mixer, anonymizing the transaction, not the address of the original sender.

If this hypothetical scenario sounds familiar, it is based on a tweet from Ethereum co-founder Vitalik Buterin, posted after the Treasury Department granted tornado cash.

The future of coin mixers

Crypto’s privacy debate continues to infuriate despite a series of legal cases and sanctions against the coin mixer.

November 2024 has been hailed as a groundbreaking moment by encryption and privacy advocates as determined that immutable smart contracts cannot be classified as “property.” In other words, self-executing code that operates without administrative control is not subject to sanction.

Recent projects like Railgun aim to provide on-chain privacy to their users, but also ensure they are compliant in the eyes of the law.

Railgun is not a traditional mixer. Without mixing coins from multiple sources, its founder believes it will avoid the pitfalls that ultimately resulted in the mixer being approved or sued.

They also use “private proof of innocence” to prevent bad actors from using the platform for illegal purposes. For example, on July 11, 2024, the infamous crypto drain known as the Inferno drain tried to wash 174 ETH using a Railgun. However, Railgun identified his wallet as being tied up by a bad actor and blocked the transaction.

Whether efforts to create legally compliant mixing services from Crypto Privacy Projects will soften lawmakers is open to debate. However, one thing is certainly true. Privacy supporters continue to fight to ensure that the code is not a panopticon.

Lia Holland, campaign and communications director for Fight for the Future, wrote in 2022:

This article was first written in August 2022 and updated in July 2025.