Law enforcement was able to pinpoint exactly how many bitcoins were received from each marketplace and then sent over to an exchanger tied to the defendant's identity, despite using multiple wallets to move the coins and a bitcoin blender service.
Does that mean bitcoin tumbling is useless? If thats right, we can assume most (if not all?) large vendors who have used tumblers are likely to be swiftly identified if they, at any moment throughout their vending history, sold their BTC on an exchanger or anything tied with their real identity?
That's quite alarming, don't you guys think?
It depends how things are tumbled.
What the chain analysis places do is flag the output flows to/from market hot wallets to external tumblers, tagging each tx with a custom marker.
Think of these outputs like a tuple consisting of an address
α
and an amountβ
:Tumbling cost a fee - we'll call
X
If any connected node further down the transaction tree accumulates a value of
Then the marker simply gets moved to that new address.
Following the transaction graph from there, what they'll typically anticipate to happen (depending on the size of the vendor) will be that the amount
β-X
arrives at eitherThis is the essential flaw in tumbling. In order for it to be successful, you can never attempt to cash out the same amount that you put through the tumbler. You should only send the input thru the tumbler to multiple outputs and leave many of the coins on the leaf nodes of the transaction tree for as long as possible.
It's possible that for now, the slower you do things, the more invisible you are, but their algorithms will very soon be literally ridiculous in terms of capabilities.
Funny enough, this is exactly the same issue with tumblers that /u/Vendor_BBMC was always on about.
I just cut out the meandering metaphors and methamatics.