As up to $2 trillion worth of money laundering continues to take place annually through traditional channels, Europol is circling Wasabi Wallet.

Key Takeaways

  • Europol has its eyes on Wasabi.
  • 30% of Wasabi deposits originate from darknet activity, according to the agency.
  • Despite being a non-custodial service, the mixer is now under scrutiny.

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Wasabi Wallet, the Bitcoin mixer, is being investigated by Europol for its alleged role in facilitating dark web transactions.

Europol Watching Wasabi Wallet Closely

Bitcoin’s days as a conduit for dark web transactions are increasingly numbered with Europol, Europe’s top law enforcement agency, now circling Wasabi for obscuring users’ identities in Bitcoin transactions. 

The privacy-focused mixer merges coins from different users into single transactions for redistribution as outputs. Mixing has the effect of obscuring the origin and destination of the coins.

According to Europol earlier this year:

OKCoin - With USD

“Over the last three weeks, BTC in the amount of nearly 50 million USD were deposited into Wasabi with almost 30% coming from dark web markets. This is a significant amount, relatively speaking, given the dark web transactions are estimated to have only 1% share of total transactions.”

Mixing Services Increasingly Under Fire

With Wasabi now under investigation, it has joined the ranks of other mixing services under similar scrutiny. This is despite an Elliptic study finding that:

“While most types of conversion services have received some bitcoins from illicit activity, the vast majority of the funds they receive do not appear to be illicit.”  

The UN estimates that between $800 million to $2 trillion worth of fiat-based money laundering occurs annually, indicating the minuscule role of cryptocurrencies to conceal transactions and value flows.

Cred - Crypto that isnt cryptic
Cred - Crypto that isnt cryptic

Mixing services nonetheless find themselves under the watchful eyes of law enforcement. Helix and Bestmixer, two popular custodial mixers, are the latest examples accused of money laundering.

The law is less clear when it comes to non-custodial mixing services, especially if they are part of a broader ecosystem of applications. CoinJoin and Wasabi Wallet do not take custody of assets, for instance.

That clears them, theoretically of wrongdoing in FenCEN’s eyes, but Europol appears to be applying different standards. Europol notes that if users use the service properly, it is tough to trace transactions.

Only if a user makes a mistake, the agency says, can blockchain analytics be useful in following the money.

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