Darknet Cryptocurrency Mixer that Processed Transactions

March 17, 2023

The Department of Justice today announced a coordinated international takedown of ChipMixer, a dark web cryptocurrency mixer responsible for laundering more than $3 billion worth of cryptocurrency between 2017 and present. This was done to encourage, among other activities, ransomware, the dark web market, fraud, and cryptocurrency theft. and other hacking schemes. The operation involved the federal court-authorized seizure of two domains that directed users to the ChipMixer service and a Github account. Also seized, by the German Federal Criminal Police (Bundeskriminalamt) of ChipMixer’s back-end servers and more than $46 million in cryptocurrency.

Coinciding with ChipMixer’s takedown efforts, Minh Quốc Nguyễn, 49, of Hanoi, Vietnam, was charged in Philadelphia today with various crimes. From money laundering and operating an unlicensed money transmission business to identity theft. All this related to the operation of Cryptocurrency Mixer.

The words of the authorities

“This morning, working with partners at home and abroad, the Department of Justice disabled a prolific cryptocurrency mixer, which has fueled ransomware attacks, state-sponsored crypto-heists and darknet purchases across the globe;” said Deputy Attorney General Lisa Monaco. “Today’s coordinated operation reinforces our consistent message: we will use all of our authorities to protect victims and take the fight to our adversaries. Cybercrime seeks to exploit boundaries, but the Department of Justice’s network of alliances transcends borders and enables disruption of the criminal activity that jeopardizes our global cybersecurity.”

“Today’s announcement demonstrates the FBI’s commitment to dismantling technical infrastructure that enables cyber criminals and nation-state actors to illegally launder cryptocurrency funds,” said FBI Deputy Director Paul Abbate. “We will not allow cyber criminals to hide behind keyboards nor evade the consequences of their illegal actions. Countering cybercrime requires the ultimate level of collaboration between and among all law enforcement partners. The FBI will continue to elevate those partnerships and leverage all available tools to identify, apprehend and hold accountable these bad actors and put an end to their illicit activity.”

Court documents

According to court documents, ChipMixer – one of the most widely used mixers to launder criminally-derived funds – allowed customers to deposit bitcoin, which ChipMixer then mixed with other ChipMixer users’ bitcoin, commingling the funds in a way that made it difficult for law enforcement or regulators to trace the transactions. As detailed in the complaint, ChipMixer offered numerous features to enhance its criminal customers’ anonymity. The Cryptocurrency Mixer had a clearnet web domain but operated primarily as a Tor hidden service, concealing the operating location of its servers to prevent seizure by law enforcement. ChipMixer serviced many customers in the United States, but did not register with the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) and did not collect identifying information about its customers. 

As alleged in the complaint, ChipMixer attracted a significant criminal clientele and became indispensable in obfuscating and laundering funds from multiple criminal schemes. Between August 2017 and March 2023.

ChipMixer processed:

  • $17 million in bitcoin for criminals connected to approximately 37 ransomware strains, including Sodinokibi, Mamba and Suncrypt;
  • Over $700 million in bitcoin associated with wallets designated as stolen funds. Including those related to heists by North Korean cyber actors from Axie Infinity’s Ronin Bridge and Harmony’s Horizon Bridge in 2022 and 2020, respectively.
  • More than $200 million in bitcoin associated either directly or through intermediaries with darknet markets. Including more than $60 million in bitcoin processed on behalf of customers of Hydra Market, the largest and longest running darknet market in the world until its April 2022 shutdown by U.S. and German law enforcement.
  • More than $35 million in bitcoin associated either directly or through intermediaries with “fraud shops,” which are used by criminals to buy and sell stolen credit cards, hacked account credentials and data stolen through network intrusions.
  • Bitcoin used by the Russian General Staff Main Intelligence Directorate (GRU), 85th Main Special Service Center, military unit 26165 (aka APT 28) to purchase infrastructure for the Drovorub malware. This was first disclosed in a joint cybersecurity advisory released by the FBI and National Security Agency in August 2020.

Beginning in and around August 2017 Nguyễn created and operated the online infrastructure used by the Cryptocurrency Mixer and promoted the services online. Nguyễn registered domain names, procured hosting services and paid for the services used to run ChipMixer through the use of identity theft, pseudonyms, and anonymous email providers. In online posts, Nguyễn publicly derided efforts to curtail money laundering, posting in reference to anti-money laundering (AML) and know-your-customer (KYC) legal requirements. He said “AML/KYC is a sellout to the banks and governments,”. Besides he advised customers “please do not use AML/KYC exchanges” and instructing them how to use ChipMixer to evade reporting requirements. 

Some statements

“ChipMixer facilitated the laundering of cryptocurrency, specifically Bitcoin, on a vast international scale, abetting nefarious actors and criminals of all kinds in evading detection,” said U.S. Attorney Jacqueline C. Romero for the Eastern District of Pennsylvania. “Platforms like ChipMixer, which are designed to conceal the sources and destinations of staggering amounts of criminal proceeds, undermine the public’s confidence in cryptocurrencies and blockchain technology. We thank all our partners at home and abroad for their hard work in this case.”

“Criminals have long sought to launder the proceeds of their illegal activity through various means,” said Special Agent in Charge Jacqueline Maguire of the FBI Philadelphia Field Office. “Technology has changed the game, though. With a site like ChipMixer and facilitator like Nguyen enabling bad actors to do so on a grand scale with ease. In response, the FBI continues to evolve in the ways we ‘follow the money’ of illegal enterprise. We employing all the tools and techniques at our disposal and drawing on our strong partnerships at home and around the globe. As a result, there’s now one less option for criminals worldwide to launder their dirty money.”

Source: Justice Department Investigation Leads to Takedown of Darknet Cryptocurrency…