Chainalysis Tracks Bitcoin Transactions Through CoinJoin Confirms The DAO Hack

This article comes fromThe Blocksecondary title

Odaily Translator | Nian Yin Si Tang

Summary:

Summary:

- Chainalysis said they tracked bitcoin through the popular mixing service CoinJoin to help identify the alleged hack of The DAO.

- but is it capable of tracking all crypto mixer transactions?Recently, Laura Shin, author of Cryptopians, published a report,claim

The identification of the perpetrators of the 2016 hack of The DAO, a small detail that is crucial to the findings, also has other deeper implications.

Blockchain analysis firm Chainalysis claims it was able to reveal the routing of transactions through a popular bitcoin mixing service called CoinJoin — somewhat defeating the very reason for bitcoin's existence.

CoinJoin is a cryptocurrency mixing tool launched by the privacy-focused Wasabi Wallet. It helps users obscure their transaction history by mixing their own funds with those of other users. When a chain of blockchain transactions goes through CoinJoin, it is much more difficult to track the movement of funds.

In the report, Shin claims to have discovered that the hackers who attacked The DAO, a crowdfunding platform built on the ethereum blockchain, in 2016 had cashed out some of the stolen funds, mixed them, and sent them to several exchanges. It is speculated that it was precisely because of this move by the hackers that the identity of the suspect was identified. But this is all based on Chainalysis successfully tracking funds through CoinJoin.

Now there are two possibilities. The blockchain analytics firm would either be able to expose every transaction via CoinJoin — a worst-case scenario for privacy advocates — or it could do so under certain circumstances, such as lax privacy practices.

When contacted, Chainalysis declined to provide further details about its CoinJoin capabilities. “Despite the attackers’ attempts to cover their tracks with mixers, we helped track the funds,” Chainalysis said. “This is another example of evidence that will be preserved forever on the blockchain.”

Asked if all CoinJoin transactions could be traced, Wasabi Wallet founder Adam Fiscor told The Block: "Unfortunately, we don't have as much information on this as you do. I don't think it's likely, but I also Want to know more."

secondary title

Viewpoint from Elliptic

Tom Robinson, co-founder and chief scientist at blockchain analytics firm Elliptic, said it would be impossible to split all CoinJoin transactions. But he acknowledged that some transactions can be traced.

"Yes, in some cases Elliptic can also split Wasabi transactions. However, this does not mean that all Wasabi transactions can be split. This is usually possible when Wasabi users are not careful Yes," Robinson said.

He clarified that tracking funds through Wasabi was possible due to some "careless" actions by users (notably address reuse).

But what about other cryptocurrency mixers, such as Ethereum’s Tornado Cash?

“No one can separate all crypto mixer transactions,” Robinson said. “For most mixers, there are only some mixer transactions that can be split.”

Elliptic said it does not attempt to track all mixer transactions. “There are entirely legitimate reasons for using mixers, and our intent is not to gratuitously invade people’s financial privacy,” Robinson explained. “However, we did try to track specific funds from illicit activities through mixers.”