A leaked Chainalysis video suggests that Monero (XMR) transactions could be traceable despite the privacy-preserving nature of the blockchain.
The leaked video, which outlines the company’s tracking methods related to the coin, has since been deleted.
Chainalysis’ potential ability to track XMR transactions raises worrying concerns, as Monero brands itself as the “secure, private, untraceable cryptocurrency that keeps your money confidential.”
When Cointelegraph approached the onchain intelligence firm about the leak, a Chainalysis spokesperson said that they “have no comment to share at this time.”
Leaked Monero tracking video. Source: Cointelegraph
A copy of the leaked video was shared with Cointelegraph by an anonymous source.
Leaked Monero tracking video. Source: Cointelegraph
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Can Chainalysis track Monero IPs via its own “malicious nodes?”
Images of the leaked video reemerged on the social media platform Reddit, posted by pseudonymous user u/__lt__.
The user claims that the leaked video shows how Chainalysis can track transactions back to 2021 via its own “malicious” Monero nodes. The user wrote that the company had likely:
“1. Run a large number of xmr nodes from various geographical locations and ISPs to capture transaction ip address and time stamps. 2. Transaction feed (ip and everything) from one or more popular wallets’ default nodes.”
Combined with fake “decoy” inputs, this method can “reduce anonymity” around Monero transactions, claimed the user.
Screenshot from leaked Monero tracing video. Source: Cointelegraph
Cointelegraph approached Monero for comment but had not heard back at the time of publication.
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Chainalysis is just “doing its job,” which could make Monero more secure
While the claims around Monero’s transaction traceability could first seem alarming, investors have no reason to panic about the blockchain’s privacy-preserving nature.
This is because Monero transactions remain untraceable for most of the world, except Chainalysis — one of the leading onchain intelligence firms in the crypto space, with vast blockchain expertise.
While the leak invited significant community backlash toward Chainalysis’ Monero nodes, the onchain intelligence firm is simply doing its job, noted u/_It_:
“They are just doing their job: tracing transactions on blockchains. No one says they can’t run nodes that collect transaction and IP info either. […] I think [Chainalysis] are kind of like whitehat hackers that make Monero more secure.”