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Bitcoin: Coinjoin mixer blacklists bitcoins linked to illegal activities

Bitcoin shuffling service Coinjoin has announced the creation of a blacklist for bitcoins obtained from illegal activity. As a result, the zkSNACKs coordinator will have the ability to deny certain UTXOs from using or registering with the service.

The announcement was made on Wasabi Wallet’s Twitter account (linked to Coinjoin) “The zkSNACKs coordinator will start denying some UTXOs from signing up for coinjoins.”

Coinjoin is a bitcoin mixing service. The system allows, in principle, anyone to send bitcoins and receive new bitcoins at a different address. This service can be used to increase the confidentiality of transactions (and therefore of users), for example by hiding the origin of transactions and/or transaction histories.

While this type of service has a noble objective, namely to ensure the confidentiality of transactions, it is clear that a minority of users take advantage of such services to commit reprehensible acts in a completely anonymous manner. The reinforcement of confidentiality logically attracts certain criminals.

Informed of this deviation, Coinjoin decided to fight it by creating a “black list”. A stance that was not welcomed by the community. For some, it is even an outcry, considering that “the authorities have infiltrated Wasabi”.

As for the main interested parties, they were keen to answer and justify themselves:

“We are trying to protect the company and the project by minimizing the number of hackers and crooks who use the coordinator (…). The company has the right to exclude troublemakers, but believe me, none of us are happy about that.”

The creation of a blacklist

The purpose of the blacklist is to track every bitcoin obtained as a result of illegal activity. Once on the list, the user who owns the bitcoins will no longer be able to use them.

In fact, an automatic system will systematically block transactions. As a result, each bitcoin obtained as a result of illegal activity will no longer be accepted on the platform. Specifically, the system, via a coordinator that normally proceeds to the mixing of bitcoins, will refuse some UTXOs to use the service.

According to the information provided, the blacklist should therefore concern those who use the zkSNACKs coordinator, which is managed by WasabiWallet, a Bitcoin wallet focused on privacy.

Adam Fisco, founder of Wasabi Wallet, called the arrival of the blacklist “a major setback for the fungibility of bitcoin. Fungibility refers to an asset that is interchangeable with another and cannot be individualized.

While this blacklist is a first in the crypto world, the idea of introducing it is not new. Some may still remember the year 2013 when a wind of protest was raised against the creation of a blacklist. It was finally abandoned because of the numerous protests it generated.

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