Yesterday, Cointelegraph claimed to have discovered a “shocking” study on Monero privacy. The cryptocurrency publication suggested that a now-deleted video showed how Chainalysis could trace Monero (XMR) transactions to individual users. Unfortunately, the reporter failed to mention that the video itself was popular among Monero supporters and taught Monero users how to circumvent Chainalysis' techniques.
Chainalysis tools combine “malicious” nodes, “decoy” inputs, and IP logs from popular wallets to de-anonymize XMR transactions.
Immediately, the crypto privacy community took notice, commenting under Cointelegraph's post and asking why the publication described these technologies as “breaking news.”
News video without news
The video explains how Chainalysis, a U.S. government contractor that performs large-scale data collection operations on major blockchain, exchanges, and cryptocurrency services, collects data from Monero nodes. Chainalysis stitches together data such as repeat transactions, IP locations, and other data points to help law enforcement track criminal activity.
But it's not news that Chainalysis is running Monero nodes and harvesting IP addresses – this has been common knowledge in the Monero community for years.
Prominent Monero user Csilla Brimer summarized the non-event: Deciphering, “Simply put, this strategy does not violate the on-chain privacy of users who avoid these fake nodes or use Tor.”
Instead of releasing the video to break the news, Monero users were simply discussing privacy tactics given Chainalysis’s apparent presence within their ecosystem.
Monero users talked about running their own nodes to avoid dependency on Chainalysis nodes. They recommended IP obfuscation services like Dandelion. They discussed privacy exchanges with less government cooperation to avoid exchanges like MorphToken that work with Chainalysis.
In other words, the video does not reveal any techniques for de-anonymizing Monero transactions that would be new to the Monero community, but instead reminds users to take smart measures to protect their privacy in light of Chainalysis' data collection activities.
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