In a joint operation led by German and US authorities, ChipMixer, a widely recognized cryptocurrency mixer among cyber criminals, has come under fire for its alleged role in money laundering.
Authorities dismantled the platform’s infrastructure on March 15. As as result of the investigation they seized 1909.4 Bitcoin, (equivalent to approximately $48 million) and 7 terabytes of data.
The crackdown was supported by an international team consisting of Europol agents, and law enforcement from Belgium, Poland, Germany, Switzerland and the United States.
Set up in mid-2017, ChipMixer specialized in mixing or otherwise eliminating trails related to virtual currency assets. The ChipMixer software blocked the blockchain trail of funds used, making it possible for criminals to launder the illegal proceeds from criminal activities like drug trafficking, weapons trafficking, ransome ware attacks and payment card fraud.
Deposited funds would be turned into small tokens with equivalent value, which were then mixed together to confuse the transaction trail on the blockchain, and therefore render it anonymous in the process.
This made the technology attractive for cybercriminals looking to launder proceeds from criminal activities like drug and weapons trafficking, ransomware attacks, and payment card fraud.
The service was available both on the normal and the darkweb and ChipMixer offered anonymity to their clients. Criminals often used this service before depositing their laundered crypto assets to cryptocurrency exchanges.
At the end of the process, the users could easily exchange the “cleaned” cryptocurrency into other cryptocurrencies or fiat currency via an ATM or bank.
Seizure Banner Placed on ChipMixer. From Homeland Security Investigations via Wikimedia Commons.
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Chipmixer platform may have laundered billions with chips
The investigation discovered the platform may have laundered over 152,000 Bitcoins (or worth roughly USD$4.1 billion) in cryptoassets. Most of this went to darkweb markets, ransomware groups, illicit goods trafficking, stolen crypto assets and other criminal activities. Information from the takedown of the Hydra Market darkweb platform discovered transactions in the equivalent of millions of Euros.
Other ransomware actors, including Zeppelin, SunCrypt, Mamba, Dharma or Lockbit have also used the service to launder ransom payments. Authorities are investigating if assets stolen after the bankruptcy of a crypto exchange in 2022 were laundered using ChipMixer.
Europol started the information exchange between national authorities and supported the operation’s coordination. The agency also provided analytical support linking data to various criminal cases within and outside the EU. Additionally, it supported the investigation through crypto tracing and forensic analysis.
@HSI_HQ and #lawenforcement partners participated in the coordinated, large-scale international takedown of ChipMixer, a darknet #cryptocurrency mixing service: https://t.co/O6tOx7z6IP pic.twitter.com/Oq4hAwYk9W
— U.S. Immigration and Customs Enforcement (@ICEgov) March 17, 2023
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