Coin Mixer

Technically, a coin mixer works by collecting deposits from many users into a shared pool and then paying out equivalent amounts to new addresses, so the coins leaving the service are no longer directly traceable to the wallet that deposited them. Bitcoin mixers typically rely on a coordinated technique called CoinJoin, where several participants combine their transactions into one large transaction with many inputs and outputs, obscuring which input paid which output. Ethereum-based mixers, most famously Tornado Cash, use smart contracts and zero-knowledge proofs to let a user deposit a fixed amount and later withdraw it to a fresh address without revealing the on-chain link between the two.

Mixers exist on a spectrum from custodial "tumbler" services, which take temporary control of funds and carry counterparty risk, to non-custodial, protocol-based designs where users never give up control of their coins. Legitimate use cases include protecting exchange withdrawals, payroll, or donations from being traced by competitors, stalkers, or data-mining firms.

Regulators view mixers with suspicion because they are also used to launder proceeds from hacks, ransomware, and darknet markets. The US sanctioned Tornado Cash in 2022, then lifted the sanctions in 2025 after a court ruled the agency had overstepped its authority; its founder still faces prosecution. In 2024, US authorities separately shut down Samourai Wallet's Whirlpool mixer and prompted Wasabi Wallet's coordinator to end its CoinJoin service. Because mixed funds often trigger automatic flags, most regulated exchanges refuse deposits that pass through known mixers.