Monero [XMR] Faces Renewed Scrutiny over Leaked Chainalysis Video Claiming Its Transactions 'May Be Traceable'

The privacy-centric blockchain has been known for its untraceable transactions. However, an anonymous Reddit user, dubbed u/lt, shared screenshots allegedly from a leaked Chainalysis video.

Crypto platform Monero (XMR) is once again in the spotlight after a leaked video from Chainalysis claimed that its transactions “may be traceable.” This sparked concerns and highlighted the ongoing clash between privacy advocates and those seeking greater financial transparency.

Monero is known for its privacy-centric blockchain, which facilitates untraceable transactions. However, an anonymous Reddit user, known as u/lt, shared screenshots that they claimed were from a leaked Chainalysis video. The leaked video allegedly contained information about Chainalysis’ tracking methods, which involved running “rogue” nodes in different parts of the world. These nodes, according to the user, collected IP addresses and timestamps, enabling them to break through Monero's privacy shield. When combined with “decoy” inputs, this data could potentially compromise anonymity, u/lt explained.

Interestingly, after posting the video, the user quickly deleted it. However, an insider revealed that Chainalysis researchers had indeed been tracking Monero since 2021. Meanwhile, the Monero community appeared divided on the matter.

Reacting to the news, security researcher Adam Cochran downplayed the concerns. He suggested that the initial Monero hype and criticism of Zcash were orchestrated by a federal agency to promote the more traceable Zcash. Cochran highlighted that privacy blockchains can offer superior security under specific conditions, but their privacy is ultimately situational and may not ensure complete anonymity.

If used perfectly correctly, in common balance amounts, with rounded numbers, at times of lots of tx, then XMR offers *more* security than a standard crypto. But it’s threat model dependent, and it is more about obscured privacy than actual dependable security.

Monero Community Responds

While some expressed concerns about the leak and questioned the effectiveness of Chainalysis’ methods, others maintained that the company is simply performing its function of enhancing blockchain security. Some experts believe that Monero transactions are probabilistically traceable, and Anti-Money Laundering (AML) tools with this capability have been available for some time.

This leak comes amidst increasing government scrutiny and crackdowns on the privacy chain. Prominent crypto exchanges, such as Binance and Kraken, have delisted XMR, the platform's native token.

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