Only days after Dutch law enforcement seized one bitcoin mixing service, another popular service ended operations and told users to withdraw funds. The service, Bitcoin Blender, is shutting down according to message in the website's header and in a post of the Bitcoin Talk forum.
“Bitcoin Blender is shutting down. Please withdraw."
Although no official statement has been made as to why Bitcoin Blender is shutting down, the owner of the bitcoin mixer posted a warning on the front-page of the Bitcoin Blender hidden service (bitblendervrfkzr.onion) and posted a message on bitcointalk.org. Users have speculated that the shutdown is related to the recent seizure of Bestmixer.io, a bitcoin mixer allegedly connected to criminal activity.
DeepDotWeb advertised Bestmixer.io in the sidebar after a similar bitcoin mixer shutdown for unspecified reasons. Archived versions of DeepDotWeb indicate that the site never hosted any advertisements for Bitcoin Blender. Law enforcement also highlighted how Bestmixer encouraged the mixing of coins to mask illegal activity. Bitcoin Blender, on the clearnet informational site, only suggested the mixing of coins for privacy reasons.
Why Mix Your Coins?
Bitcoin is not quite anonymous. In fact, anybody who knows just one of your addresses, could track your entire transaction history and learn a lot of information about you - who you're trading with, where you're buying from, and how wealthy you are. This is called “Blockchain Analysis”.
Archived version of the site's homepage: archive.fo/aDAsh
The hidden service version of “why mix your coins” is similarly innocent.
Why Mix Your Coins
Using Bitcoin does not protect your anonymity. This is because Bitcoin works on a public ledger, meaning anyone anywhere can see and follow every transaction you ever make. From the moment you buy your coins, to the moment you cash them out… they can be followed. And if anything along the way can be linked to your identity - for example if you bought or sold using your bank account, face to face with cash, or even using a voucher from a store with CCTV - then an agency with the right tools could theoretically find you without much trouble. Classic examples of people who might follow your online activity and reveal your identity, are Law Enforcement Agencies, somebody with a grudge, or hackers who have noticed you are moving large amounts of money around.
But by ‘mixing’ your Bitcoins, you are essentially breaking the link between your identity and your transactions - Bitcoin Blender lets you prevent Blockchain Analysis by swapping your coins for somebody else's. In other words, you deposit your coins into one ‘pot’, and we send you coins from another ‘pot’, breaking the chain.
It should go without saying that coins should be withdrawn only to a clean bitcoin wallet.