Controversial crypto platform Monero [XMR] Chainalysis is facing new scrutiny after a leaked video showed it claiming transactions may be traceable, a worrying development that highlights the ongoing battle between privacy advocates and those calling for greater financial transparency.
Privacy-focused blockchains are known for their untraceable transactions. However, an anonymous Reddit user who goes by u/lt shared what appears to be a screenshot of a leaked video from Chainalysis. The leaked video purportedly contains information detailing how to track them, including running “malicious” or rogue nodes scattered around the world. These nodes collect IP addresses and timestamps, allowing them to bypass Monero's Privacy Shield. According to u/lt, this data can be combined with “decoy” inputs to undermine anonymity.
Notably, after posting a sensational video detailing the tracking method, the user quickly deleted it. According to insiders, Chainalysis researchers have been monitoring Monero since 2021. However, the Monero community remains divided.
Security researcher Adam Cochran reacted to the news but seemed unfazed. He believes that the initial Monero hype and Zcash criticism was engineered by federal agencies to promote the more traceable Zcash. He stresses that while privacy blockchains can provide better security under certain conditions, their privacy is context-dependent and does not guarantee complete anonymity.
When used completely correctly, with common balances, rounded numbers, and high volumes of transactions, XMR offers *more* security than standard crypto. However, this depends on the threat model, and is more about privacy obfuscation than actual reliable security.
Monero Community Reaction
While some are concerned about the leak and question the true effectiveness of Chainalysis's methods, others argue that the company is simply doing its job to improve blockchain security. Monero transactions are considered probabilistically traceable by some experts, making them vulnerable to AML attacks. [anti-money laundering] Tools with this functionality have existed for some time.
That said, the leak comes as privacy chains face increased government scrutiny and crackdowns, with the platform's native token, XMR, having been delisted from prominent cryptocurrency exchanges such as Binance and Kraken.
