Cryptocurrency Mixer (Tumbler)

On most public blockchains every transaction is visible, so investigators can follow coins from address to address. A mixer tries to cut that link. Users send coins to the service, which blends them with those of other users and later pays out the same value, minus a fee, to new addresses chosen by the user. Some mixers are run by a central operator who can see and keep records; others use smart contracts and have no obvious operator. Legitimate users sometimes want privacy, but mixers are often used to launder stolen or ransom funds, so regulators treat them as high risk. Blockchain analytics firms try to trace through them by looking at timing, amounts and patterns. Exchanges often flag or refuse deposits that come straight from a known mixer. Some governments have sanctioned particular mixing services. Compliance teams use mixer exposure as a screening signal: a deposit traced to one usually triggers source-of-funds questions before the coins are credited.

A crypto exchange's monitoring tool shows a new customer receiving 40 units of a coin from an address tagged as linked to a mixing service. Within an hour the customer converts all of it to a stablecoin and tries to withdraw it to a different platform. The exchange holds the withdrawal, asks for the source of funds, and reports its concerns to the financial intelligence unit.