Can transactions related to digital currency mixers be tracked?

Recently, someone claimed to have been able to track the transactions of one of the most popular bitcoin mixers and identify the hacker on the DAO platform (The DAO) with the help of the Chinese blockchain analysis company Chainalysis. Meanwhile, members of the digital currency community are facing important issues; Including whether the company can track all transactions of mixers for digital currencies and if so, is the privacy of traders endangered or not?

According to The Block, Laura Sheen, a reporter and author of the book Cryptopians, recently claimed in a report that a hacker identified the Dao platform in 2016. So far, there are few details about his claims and those allegations have had consequences.

According to the report, blockchain analytics company China Alice tracked the hacker’s transactions with bitcoins through a popular mixer called Quinn Join. This calls into question the whole reason for the existence of mixers.

Quinjoin is a digital currency mixer that also uses Wasabi’s wallet. With this tool, users can combine their funds with other means and thus hide their transaction history. When users put their funds into Quinn Join transactions, it becomes much more difficult to track them and determine which address each device that came out of the mixer belonged to.

As mentioned, Shin claims that the hacker de Dao has been found. The protocol is a crowdfunding platform in the Atrium China block, whose code was hacked in 2016. According to Shin, the hacker took money, combined it with the money of other investors and then sent it to several exchange offices. Apparently, this criminal was identified at the stage of cashing money in an exchange office. However, all this is true only if the Chinese company Alice tracked the money correctly and without error through the mixer Quinn Joven.

Now there are two possibilities. The first is that the Chinese company Alice can track all transactions through Quinn Join. This is the worst case scenario for privacy fans. The second possibility is for the Alice chain to be able to do this in certain circumstances, such as users’ privacy errors.

The Chinese blockchain company declined to give more details about Quinn Joven, saying:

Despite the fact that this hacker tried not to leave a trace with the help of mixers, we were able to track the hacked funds. This is another proof that everything is written in the Chinese block forever. We will not go into more detail, but we confirm that Lara Sheen’s report on our role in her research is accurate.

Asked if all of Quinn Jovin’s transactions could be traced, Adam Fiscour, founder of Wasabi Wallet, said:

Unfortunately, we do not have more information in this area than you. I think such a thing is unlikely, but I, like you, would like to know more.

Only part of the transactions are tracking mixers

Tom Robinson, founder and senior researcher in China’s block analysis department at the Elliptic Institute, said not all transactions in the Quinn Jovin mixer can be decomposed. However, he acknowledged that some of his transactions could be traced.

He said:

Yes. Elliptical can decompress transactions with the Wasabi wallet under certain conditions. However, this does not mean that all transactions in this portfolio can be decomposed. This can usually only be done if the user of this wallet has made a mistake.

He explained that if Wasabi wallet users do not do the right thing, and especially if they use the same address more than once, their transactions can be tracked.

But does this also apply to other blockchain mixers, such as Tornado Cash, one of Atrium’s mixers?

“Robinson said:

No one can analyze all the mixer transactions. In fact, in most mixers, only part of the transactions can be decomposed.

“Elliptic does not intend to track all transactions with a digital currency mixer,” Robinson said.

There are very plausible reasons to use mixers and our goal is not to violate people’s financial privacy for no reason. However, we use mixers to try to track specific transactions involving illegal activities.

The publication Can transactions with a digital currency mixer be tracked? appeared first for currency.

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