Mixers, also known as tumblers, are essential tools for anyone seeking to enhance the privacy and anonymity of their cryptocurrency transactions. These services take the tainted coins of multiple users and re-split them into new addresses that are proportional to their initial deposits, thus obscuring the origin of individual transactions.

But how do they work, why are they important and what risks do they entail? This article examines these questions and more, offering a deeper look at how crypto mixers operate, why government watchdogs have an issue with them and alternatives for privacy-conscious users.

Crypto Mixer: Is it Legal?
While many users may seek to use crypto mixers for entirely legitimate reasons, others depend on them to facilitate illegal activities like money laundering. For this reason, mixers are a common target for government authorities. Regulators such as the US Financial Crimes Enforcement Network (FinCEN) and EU regulators have been known to restrict or even ban transactions that include mixed coins.

The main issue that governments have with mixers is that they allow individuals to circumvent laws against money laundering and other illicit activities. While it's vital for law enforcement to address such activities, over-regulation and excessive scrutiny could stifle innovation in the cryptocurrency ecosystem.

Centralized custodial mixers, which emerged as early as 2011, temporarily take ownership of users' coins. They are generally seen as more of a risk to privacy than noncustodial mixers because of this. They are often subject to hacks and run the risk of being shut down. Noncustodial mixers, such as CoinJoin, are commonly built into privacy wallets such as Samourai Wallet and Wasabi Wallet, and function by combining the coins of several users in one transaction before shuffling them all together.   Crypto Mixer