CoinJoin mixing tool to block illegal transactions

on Mar 14, 2022
  • CoinJoin will use the zkSNACKs coordinator to block certain unspent transaction outputs
  • The announcement from Wasabi Wallet, who operate CoinJoin, provoked privacy advocates to lash out
  • The illicit share of all crypto transactions volume comprised just 0.15% last year

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CoinJoin, a popular Bitcoin (BTC/USD) mixing tool, will block transactions flagged as illicit or associated with such, CoinTelegraph reported, citing an announcement from the official Wasabi Wallet Twitter account, of which CoinJoin is a part.

CoinJoin will use the zkSNACKs coordinator to block certain unspent transaction outputs (UTXOs) from registering with CoinJoin. zkSNACKs coordinator is a virtual machine used to mix the origin of the transitions.

Money laundering via mixing tools is becoming harder

Privacy-focused mixing tools are mainly applied to conceal the origin of the transactions and are often used to wash illegally acquired money. Due to the fact that Chainalysis and other platforms have developed special tools for the blockchain, a public ledger, money laundering using mixers has become very hard over the past few years.

Privacy advocates lash out

The announcement from Wasabi Wallet provoked privacy advocates to lash out. They accused Wasabi of succumbing to law enforcement. A Wasabi developer, whose handle on Twitter is Rafe, pointed out they had to comply with specific benchmarks, but they would do so without compromising on their core values.

The developer added that the blocking of UTXOs was limited to the ZkSNACKs coordinator. Users of any other coordinator remain safe and private. Wasabi Wallet founder Adam Fiscor acknowledged that blacklisting has affected the privacy wallet and this might turn out to be a threat to Bitcoin’s fungibility.

Crypto use for illegal acts is fraction of total transactions

Although many centralized entities insist cryptocurrencies are used for illicit activities and mixing tools and privacy wallets help them, research and data analytics have shown that this use of crypto accounts for a minute part of total transaction activity.

As more and more powerful analytical tools emerge, it has been on a constant decline. Chainalysis data shows that the illicit share of all crypto transactions volume was just 0.15% last year.

Bitfinex arrests: a case in point

The recent arrests of Ilya Lichtenstein and Heather Morgan, the husband and wife that tried to launder money from the Bitfinex multi-billion dollar hack, is a case where the criminals were not just caught, but the authorities also recovered most of the hacked Bitcoin.