(Bloomberg) -- As government scrutiny of Binance Holdings Ltd. and other top crypto players intensifies, a company called ChipMixer is in the crosshairs of US and European law enforcement. They describe it as a mechanism to launder money, and the man allegedly behind the company has gone dark.
As it happened, I exchanged emails with someone involved a few years ago, and the conversation shows the flimsy defense ChipMixer used to claim its legitimacy.
On March 15, US and European authorities announced the takedown of ChipMixer, a cryptocurrency “mixing” platform that commingled crypto assets and obfuscated traces of ownership. The US Justice Department said the service was run by 49-year-old Vietnamese developer Minh Quốc Nguyễn and that it was used by hackers, ransomware groups and other bad actors to launder billions of dollars’ worth of illicit proceeds between 2017 and 2023.
ChipMixer was also key to an unusual crime starting in 2017, in which a former Microsoft Corp. employee stole huge quantities of Xbox gift cards and sold them for Bitcoin. US prosecutors said in a subsequent court case that the Bitcoin was funneled through ChipMixer, which they described as a money laundering system designed to “obliterate the blockchain trail.”
When I contacted the site while covering the gift-card case, a representative who didn’t provide a name was adamant the service was merely a privacy tool. “Privacy is not a crime,” this person wrote in 2021.
In retrospect, the responses are fascinating, not only because ChipMixer’s website has since been seized by the Federal Bureau of Investigation but also because they were likely written by Nguyễn himself. According to the US criminal complaint, ChipMixer’s Proton email account, with which the rep replied to me, had links to two of Nguyễn’s aliases, James Hall and Max Archdall, which he purportedly used to conduct business.
No government agencies or reporters have apparently been able to reach Nguyễn. A Justice Department spokesperson said he is not yet in custody, and ChipMixer didn’t respond to my recent follow-up emails.
The ChipMixer rep’s 2021 response to me, whether from Nguyễn or an associate, yields insight into how he may defend the service in court if he’s caught. (It’s unclear if there were more people involved, though the rep wrote in the plural “we,” as in, “We do not do special service for criminals.”)
The representative’s main argument was that crypto mixers, which essentially stand accused of switching out dirty crypto with clean crypto, were only intended to provide legitimate financial confidentiality. “Chipmixer takes any deposit and returns small sized ‘chips,’” the rep said.
Writing in a style suggesting English is not this person’s first language, the rep said a primary utility of ChipMixer was to mask how much money someone has in their crypto wallet. “Imagine paying for coffee while your credit cards screams you have enough cash to buy cheap car,” the rep continued. “There is no ‘dirty’ or ‘clean’ here.”
In any case, the rep said, there was no way for ChipMixer to identify people behind its transactions. The person also said ChipMixer only made money through “donations.” This isn’t exactly true: According to the complaint, during the FBI’s investigation, ChipMixer charged an undercover agent a 2.44% fee for mixing crypto, which it referred to as a “donation” during the process.
The service was certainly embraced by criminals to cover their tracks, as was the case with the Xbox grifter and even North Korean hackers, as the FBI has since alleged. But the ChipMixer rep said it was no different than any platform that could be misused.
“Dark-web criminals use Google browser to sell drugs and ransomware hackers use Facebook Whatsapp to send ransom notes,” this person wrote. “Chipmixer is used by many individuals and some may be bad people.”
©2023 Bloomberg L.P.