November 25, 2020

Cryptheory

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BlockFi is Flagging Deposits with Coinjoin History

3 min read
BlockFi is Flagging Deposits with Coinjoin History

CoinJoin is a method for combining multiple Bitcoin payments from multiple spenders into a single transaction to make it more difficult for outside parties to determine which spender paid which recipient or recipients (Bitcoin mixing).

 

Bitcoin and its users are increasingly encountering unpleasant problems when depositing their bitcoins, which have been intentionally interrupted by a linkable history using the so-called CoinJoin. After services such as Paxos, Paxful and Bitfinex and Binance exchange offices, BlockFi is the fifth case in a series where deposits of this type have been compromised.

 

 

Users who have personally touched this issue noted that BlockFi information was only a temporary warning that would result in the freezing of funds in the event of repetition. In addition, mention was made of Wasabi Wallet and the notorious problem of coordinator fee address reuse. The long-term use of the same public address for CoinJoin transaction fees at Wasabi Wallet has been strongly criticized by developers from competing Samourai Wallet, including the overall implementation of Chaumian ZeroLink, which creates deterministic lines.

 

 

It should be noted that only recently, after considerable pressure from users of Wasabi Wallet and the surrounding community, the developers have fixed this problem and every fee for CoinJoin now goes to the newly generated public address. However, it should be noted that if the problem is as serious as the other party claims, the damage has already been irreversibly caused and the users affected by the problem should be treated accordingly.

 

 

As Zac Prince clearly answered, this is not something the platform would have a choice of. It is the regulator’s duty to monitor these types of transactions

 

Although this is a serious problem, there is no change in the human right to privacy, nor is it necessary for transactional hygiene when using bitcoin. There are many ways to work with Bitcoin correctly, but in the sense of CoinJoin, the mixing process itself is only half the whole thing. The second, more important, is and will always be the question of how to spend your bitcoins correctly and how to work with them after CoinJoin.

 

Again, in this matter, we remind Samourai Wallet, whose developers were the only ones to think of the so-called post-mix tools that are used to effectively spend mixed bitcoins. An example is the Stonewall tool, which disrupts transaction analysis in such a way that it is not well known whether it was genuine CoinJoin or just a simple payment.

 

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