It's quite a unique method to mix Bitcoin, and I'm sure it will add an extra layer of privacy but I would like to know what will happen if a centralized exchange finds out that a user is doing conversion for a mixer service?
I mean won't it put any risk to the account that's registered on a centralized exchange which's going to be performing the mixing of Monero to Bitcoin. However, if the exchange can't find out that then it would be a great mixing.
You seem to have not understood the best of what is happening here.
You as a user send BTC to Mixer and they send clean coins to your BTC address. So, you have nothing with any exchange.
In the background, Mixer will send your Bitcoin (as Mixero) to a decentralised exchange swap it for XMR, then send those XMR to the centralised exchange and swap XMR to BTC. That BTC can be called "clean" because it comes from a centralized exchange.
CEX (the most risky point of the whole process) cannot track XMR, so there is no reason to block funds. It seems like a good solution, now the only question is how much all the transactions will cost.