CoinJoin, the popular bitcoin (BTC) mixer, will block transactions that are linked or marked illegal. The announcement came from the Wasabi Wallet official Twitter account, of which Coinjoin is a part.
The official announcement indicated that CoinJoin services will begin preventing certain unused transaction outputs (UTXOs) from being registered in CoinJoin using the zkSNACKs formatter. The zkSNACKs formatter is a virtual machine that is used to randomly switch the jump source.
Privacy-focused mixing tools are primarily used to hide transactional assets and are often seen as a means of money laundering. But since the blockchain is a public ledger with many forensic tools developed by companies like Chainalysis, money laundering through mashups has become very difficult in recent years.
The company’s latest statement upset several privacy advocates, who accused the privacy-focused wallet of being subservient to law enforcement. However, developer Wasabi, who goes by the Twitter name Rafe, has made it clear that they have not compromised on their core values, but that they must follow certain standards.
Related Topics: What are bitcoin mixers and why are exchanges banning them?
Ruff also noted that UTXO blocking is limited to the ZkSNACK formatter, and people using any other format can feel safe. However, Adam Fiskore, founder of Wasabi Wallet, has acknowledged that his wallet’s privacy has been blacklisted and he believes this could pose a threat to Bitcoin replacement.
Most governments and central authorities continued the story about the use of cryptocurrencies for illicit activities and the role of privacy wallets and mixing tools in helping them. However, research and data analysis have shown that the use of cryptocurrencies for illegal activities is a very small part of the total transactional activity, and with the advent of more powerful analytical tools, I have steadily declined.
According to Chainalysis, in 2021 the illegal share of all cryptocurrency transactions fell to 0.15%.
The percentage of illegal transactions in crypto. Source: Chain Analysis
The recent arrest of a married couple found attempting to launder a multi-billion dollar Bitfinex hack is another prime example of how not only were hackers caught trying to launder stolen money, but the authorities were able to do so. Most of the hacked BTC also recovered.