Bitcoin Fog - Definition from the Hotspot Shield Encyclopedia

Bitcoin fog is a form of Bitcoin Tumbler service that allows a user to mix their own Bitcoins in with other users Bitcoins in a wallet to provide a level of anonymity and to prevent the source of that users Bitcoins from being traced back to them.

Bitcoin Fog was embroiled in a Tor marketplace theft incident in 2013 - A user exploited a vulnerability in the anonymous marketplace called Sheep Marketplace and used this to steal Bitcoins worth an estimated $6 million. As it transpired, the user tried to launder their Bitcoins using the Bitcoin Fog service and distribute them elsewhere to avoid persecution. A similar incident occurred again in 2015 when around 7000 Bitcoins were stole from a Chinese digital currency exchange, and the coins were traced back to Bitcoin Fog.

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