What Are Coin Mixers and How Do They Work?

Coin mixers have captured the eye of each the cryptocurrency neighborhood and regulators because the battle for privateness ramps up.

In 2021, the founding father of coin mixer Bitcoin Fog was arrested on prices together with cash laundering and working a cash transmission enterprise and not using a license.

A yr later, the U.S. Treasury Division issued sanctions in opposition to Twister Money, an Ethereum coin mixing service, successfully banning People from utilizing it.

In a landmark ruling in November 2024, the U.S. Fifth Circuit Court docket dominated that the Treasury had overstepped by sanctioning Twister Money’s sensible contracts, though its broader designation remained intact.

In a reversal of its 2022 choice, the Treasury introduced in March 2025 that it had delisted Twister Money from its listing of events sanctioned by the Workplace of Overseas Belongings Management, or OFAC.

However what do coin mixers like Twister Money and Bitcoin Fog do—and why do individuals use them? On this article, we’ll look at the know-how behind mixers and their respectable and illegitimate makes use of.

What’s a coin mixer, and why use them?

A coin mixer is a service that permits customers to obfuscate the origin and vacation spot of transactions. Customers ship cryptocurrency to the service, have that crypto blended with different cash or tokens, after which ship the equal quantity of “blended” cash to a recipient tackle, hiding the connection between the sender and recipient.

There are lots of respectable makes use of for this type of service. Simply as chances are you’ll not need your employer to know the intimate particulars of each financial institution or bank card transaction that you have ever made, you might also not need your employer—or anybody else, for that matter—to know each element of each crypto transaction you’ve got ever made both.

However because the adoption of crypto and blockchain instruments grows, real-world identities have gotten more and more linked to blockchain addresses—with each buy, switch, or interplay related to these addresses laid naked on a public, clear, distributed ledger. And that is the place coin mixers are available.

Nevertheless, this capability to masks the id of wallets and obfuscate transactions makes coin mixers a sexy software for cybercriminals, and thus a goal for regulation enforcement.

Whereas politicians and regulation enforcement have railed in opposition to the usage of cryptocurrency in felony enterprises, coin mixers occupy a grey space between facilitating cash laundering and preserving the proper to privateness. Due to blockchain’s permissionless and clear nature, some crypto customers depend on the added privateness that coin mixers present.

Privateness advocates argue that coin mixers are particularly helpful, even mandatory, in instances the place an individual’s actions—like journalism, civil disobedience, and protest—can put that particular person in danger. Due to this, they require larger privateness of their crypto transactions.

Then again, regulation enforcement and authorities businesses see coin mixers as a approach for criminals to launder cash utilizing cryptocurrency, and providers like Twister Money as a way of obscuring the place the funds originated.

In its announcement of the sanctions in opposition to Twister Money, the Treasury Division mentioned that criminals had used Twister Money to launder cash, saying the service processed greater than $7 billion price of digital forex since its creation in 2019. Based on blockchain analytics agency Elliptic, round $1.5 billion of that determine was linked to illicit exercise.

Amongst these illicit funds, the Treasury mentioned, had been a mixed $103.8 million stolen from crypto bridging providers by Lazarus Group, a state-sponsored North Korean cybercriminal group.

A November 2024 ruling by the U.S. Fifth Circuit Court docket discovered that the Treasury had overstepped its authority, and that Twister Money’s immutable sensible contracts “aren’t property as a result of they don’t seem to be able to being owned.” The choice reversed a decrease court docket ruling, noting that protocols constructed on sensible contracts can’t be categorised as providers as a result of they function with out “human intervention.”

In March 2025, the Treasury reversed course, eradicating Twister Money from its listing of sanctioned entities. “Based mostly on the Administration’s assessment of the novel authorized and coverage points raised by use of monetary sanctions in opposition to monetary and industrial exercise occurring inside evolving know-how and authorized environments, we have now exercised our discretion to take away the financial sanctions in opposition to Twister Money as mirrored in Treasury’s Monday submitting in Van Loon v. Division of the Treasury,” the Treasury mentioned in an announcement.

A month later, a federal court docket dominated that the Treasury’s actions had been “illegal,” completely barring OFAC from reinstating sanctions in opposition to Twister Money. Choose Robert Pitman, of The U.S. District Court docket for the Western District of Texas, positioned an order compelling the Treasury to be “completely enjoined from implementing” sanctions on the coin mixer, delivering a convincing victory for privateness advocates.

In July 2025, the united statesCourt of Appeals for the Eleventh Circuit dismissed an enchantment filed by crypto advocacy group Coin Heart, during which it argued that the Treasury Division had exceeded its statutory authority in sanctioning Twister Money. The court docket granted a joint movement to vacate the judgement and remand with directions to dismiss, with each events agreeing that the enchantment was “moot” following OFAC’s March choice to take away sanctions in opposition to the coin mixer.

Examples of coin mixers

Twister Money: Based in 2019 by Alexsey Pertsev and Roman Storm, this mixer was sanctioned by the U.S. Treasury Division in 2022. Twister Money completely providers the Ethereum Community and is non-custodial.
Samourai Pockets: A non-custodial Bitcoin-only mixer based in 2015 by Keonne Rodriguez and William Longergan Hill, its founders had been arrested and charged with conspiracy to commit cash laundering in 2024.
Wasabi Pockets: Based by pseudo-anonymous zkSNACKs in 2018, it makes use of the ZeroLink protocol to create transaction privateness. Wasabi blocked U.S. residents from utilizing the mixer in 2024 after the founders of Samourai Pockets had been arrested.
Bitcoin Fog: Based in 2011 by Roman Sterlingov, Bitcoin Fog was a custodial mixer, and held person funds within the course of of blending them. Sterlingov was convicted of cash laundering in 2024.

How do coin mixers work?

Earlier than Twister Money was taken down, it used sensible contracts to simply accept token deposits from one tackle and allow their withdrawal from a special tackle.

Different coin mixers function in an identical approach, with sensible contracts that work as a pool the place all of the deposited tokens get blended collectively. When funds are withdrawn from these swimming pools, the on-chain hyperlink between the supply and the vacation spot is damaged, anonymizing the transaction.

These sorts of coin mixers are usually non-custodial, that means there is no such thing as a third-party management of the pockets and funds, merely the creation of the sensible contracts.

As a result of these providers use no middleman, they’re reliably impartial—however that additionally means they could be a tempting software for cybercriminals trying to launder stolen crypto, as within the case of Lazarus Group.

Coin mixers: a timeline

October 2011: Bitcoin tumbler Bitcoin Fog is launched.
December 2019: Coin mixer Twister Money is launched.
April 2021: The U.S. Division of Justice declares the arrest of Bitcoin Fog operator Roman Sterlingov.
August 2022: The U.S. Treasury Division sanctions Ethereum coin mixer Twister Money. Days later, developer Alexey Pertsev is arrested in Amsterdam on cash laundering prices.
March 2024: Bitcoin Fog operator Roman Sterlingov is convicted of cash laundering.
April 2024: U.S. authorities arrest and cost the founders of Bitcoin mixer Samourai Pockets, accusing them of conspiracy to commit cash laundering.
Could 2024: Wasabi Pockets declares the preemptive closure of its mixing service, banning U.S. prospects from utilizing its providers. Concurrently, Phoenix Pockets pulls its app from shops within the U.S., whereas {hardware} pockets Trezor declares the discontinuation of its Coinjoin function.
November 2024: The U.S. Fifth Circuit Court docket guidelines that Twister Money’s immutable sensible contracts can’t be categorised as “property.”
March 2025: The U.S. Treasury lifts its sanctions in opposition to Twister Money.
April 2025: A U.S. federal court docket decide points an order completely blocking the Treasury from reinstating sanctions in opposition to Twister Money.
July 2025: A U.S. Court docket of Attraction grants a joint movement to finish crypto advocacy group Coin Heart’s enchantment in opposition to OFAC’s sanctions.

Respectable use instances of coin mixers

Let’s say there’s a enterprise proprietor and crypto fanatic named Robert who needs to ship Ethereum to a hacktivist group working out of Ukraine. Robert does not need his donation to be traced again to him, so he makes use of a coin mixer.

Robert goes to the coin mixer web site and deposits the Ethereum he needs to donate. The despatched quantity is deposited into the mixer’s sensible contract and pooled with the opposite hundred, hundreds, and even hundreds of thousands of transactions already in its pool. After receiving affirmation that the deposit was profitable, Robert goes to the withdraw tab, enters the recipient’s tackle into the mixer, and sends the Ethereum from the mixer.

The Ethereum is then despatched from the blending to the recipient. On the receiving finish, the tackle proven is that of the mixer and never the unique sender’s tackle, anonymizing the transaction.

If this hypothetical situation sounds acquainted, it is based mostly on a tweet from Ethereum co-founder Vitalik Buterin, posted after the Treasury Division sanctioned Twister Money.

The way forward for coin mixers

The controversy over crypto privateness continues to rage, regardless of the collection of authorized instances and sanctions in opposition to coin mixers.

The November 2024 ruling that immutable sensible contracts can’t be categorised as “property” was hailed by crypto and privateness advocates as a landmark second, that means that self-executing code that operates with none administrative management can’t be topic to sanctions.

Newer tasks like Railgun purpose to offer customers on-chain privateness, but additionally be sure that they continue to be compliant within the eyes of the regulation.

Railgun just isn’t a standard mixer; it doesn’t combine cash from a number of sources collectively, and its founders consider it avoids the pitfalls that finally led to mixers getting sanctioned or sued.

It additionally makes use of “Non-public Proof of Innocence” to make sure dangerous actors can not use the platform for illicit functions. For instance, on July 11, 2024, a infamous crypto drainer generally known as Inferno Drainer tried to make use of Railgun to launder 174 ETH. Nevertheless, Railgun recognized that the pockets was tied to a foul actor and blocked the transactions.

Whether or not crypto privateness tasks’ efforts to create legally compliant mixing providers will mollify lawmakers is open to debate. One factor’s for sure, although—privateness advocates will proceed to combat to make sure that crypto is not a panopticon.

As Lia Holland, Campaigns & Communications Director at Combat for the Future, wrote in 2022: “Allow us to be clear, hackers and cybercriminals, in addition to people who help them, are deplorable and needs to be stopped—however not in a approach that compromises human rights and the primary modification.”

This text was first written in August 2022 and up to date in July 2025.