Can you trace back to the sender of a transaction when receiving currency?

[Dreykku]

Hi,

I've been searching for hours without any success. I'm sure this question has been asked a lot but can't find it.
I'd simply like to know if when sending let's say ETH to someone from an exchange (kraken for example), the receiver can trace back your "personal" ETH address you typically use to deposit and withdraw ETH on that exchange or just know anything that could lead to infos on your ETH address(es) on this exchange (provided you didn't give them directly to begin with).


I know that on Etherscan it shows the Exchange's wallet (often called the name of the exchange, e.g. "Kraken 5") so it means that you don't send it directly to the receiver but basically allow the exchange to take the indicated amount from your wallet and the exchange will itself sends the ETH to receiver via its wallet (that's what i deduced from looking at etherscan). But then, does that mean the receiver could theoretically just check the public transactions on that exchange's wallet at the exact same date and time and retrieve our own address at around the time he received it (minus the time needed to send ETH on avg at that time)?

Even if hundreds of transactions are made each seconds, the receiver would only have to receive multiple amounts at different times to practically be 100% sure to locate the actual sender's address by elimination (manually or using a simple algorithm) and from there he can know all the transactions linked to that address even though it wasn't given to him. It would be like being able to read all the past and future transaction of someone's else bank account just be receiving fiat money from that someone.

Is this how it works? Am i missing something? Is this how it's supposed to work ? I know Ethereum blockchain is supposed to be transparent, but that's from one personal wallet to another. Exchanges never really specifically mentioned what information they give to the receiver but at first glance one could have guessed it's "anonymous" since it comes from the exchange's wallet and not the personal address they provided to you, but if it's not the case, they should specifically say so cause some people could be deceived by this lack of information/knowledge.

If it's too complicated to answer or don't want to delve into it, thank you for at least linking me to a guide that would explain that issue, since i couldn't find any. Thank you for help.

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[jackg]

There are a few things to unpack here.

The first is that, no, they can't directly trace your public key if you send ethereum as most exchanges have multiple wallets at least. Binance seems to have at least 3 for example.

Second, if you send an obscure token to an exchange like hitbtc then they might be able to track you because there might not be many depositors there or the only recent depositor could be just you.

Third, try not to send the same amount in and out of exchanges if you can help it (or similar) sending 0.987 btc into an exchange and withdrawing 0.9865 is going to make it fairly easy for someone to think both are from the same person regardless of anything else.

[SquirrelJulietGarden]

I'd simply like to know if when sending let's say ETH to someone from an exchange (kraken for example), the receiver can trace back your "personal" ETH key address you typically use to deposit and withdraw ETH on that exchange or just know anything that could lead to infos on your ETH public key(s) on this exchange (provided you didn't give them to begin with).

They trace your public address, not public key. It is privacy score that is affected by your deposit in and withdrawal out of exchanges. I don't know the privacy score for Ethereum transactions but blockchair.com builds the Privacy-o-meter for Bitcoin transactions. You can see how it works for some random transactions you choose. If you want to check yours, do it with Tor connections.
(Compilation) What is the best Ethereum explorer?. Is this explorer ETHtective.com what you are finding?

I know that on Etherscan it shows the Exchange's key (often called the name of the exchange, e.g. "Kraken 5")

It is a label or tag, not a key.

Exchanges never really specifically mentionned what information they give to the receiver but at first glance one could have guessed it's "anonymous" since it comes from the exchange's wallet and not the public key they provided to you, but if it's not the case, they should specifically say so cause some people could be deceived by this lack of informations/knowledge.

Exchange wallets or addresses are very easily to be recognized. They do many transactions in short time and with send-outs, they often proceed from one address to multiple addresses (as for batch transaction for multiple withdrawal requests from customers).

One person usually do transaction from one address to another address (or two if they use change address).

[Dreykku]

The first is that, no, they can't directly trace your public key if you send ethereum as most exchanges have multiple wallets at least. Binance seems to have at least 3 for example.

Well, yes, they have the actual address of the exchange used since they can see the address of sender on etherscan. Even if exchanges have several wallets, at least in my case, the same wallet has always been used to withdraw my ETH and to deposit to the receiver i sent it to. Was i just unlucky they used the very same wallet all the time? or is it normal? If so, as i mentioned, it becomes "fairly easy" (even if it must be extremely tedious) to trace the transaction back to the user even if the exchange's wallet is extremely active. Indeed, just a few transactions separated enough from one another in time to narrow it down to locate the same private wallet that is always withdrawn from every time receiver gets ETH.

Third, try not to send the same amount in and out of exchanges if you can help it (or similar) sending 0.987 btc into an exchange and withdrawing 0.9865 is going to make it fairly easy for someone to think both are from the same person regardless of anything else.

But we have to. When we send a certain amount to someone's wallet via our exchange, he'll receive that exact certain amount all the time. So, he'll know. And the exchange will always take that exact amount from the same address all the time too.

[Dreykku]

They trace your public address, not public key.

Arf, sorry for my confusion. Thanks a lot. I've corrected my post and my answers accordingly, i think it's good now. I indeed meant address every time i wrote public key. But with that correction in mind, my interrogation still works. Not sure what you mean by privacy score and if it applies to ethereum in general or a particular exchange.

I just wanted to know if my scenario mentioned above was possible (finding the sender's wallet by data mining the exchange's wallet transactions around the time a specific transaction has been made, even if it takes several attempts to narrow it down to one repeating address that keeps on appearing during a transaction with that specific receiver).
Cause i'm not sure that when you say "Exchange wallets or addresses are very easily to be recognized." it means that it's indeed possible to trace back to a sender or is not related to my issue.

[joniboini]

Well if you're doing repeated transactions with the same amount, time, etc I guess it would be fairly easy compared to random deposit/withdrawals. I mean, that's basically how chain analysis work. If you don't publish any identifiable information such as your identity along with that address, I think at most they'll probably conclude that address X belongs to person A. If you're afraid your receiver find out your identity, why not change your transaction method, or use a different address to do your business. There's also a mixer service on ETH but I never tried them, so that's that.

[Findingnemo]

It would be like being able to read all the past and future transaction of someone's else bank account just be receiving fiat money from that someone.

Is this how it works? Am i missing something? Is this how it's supposed to work ? I know Ethereum blockchain is supposed to be transparent, but that's from one personal wallet to another.

Fairly, it is not possible to find the transaction list of a bank account just only with a transaction received on your side but it is possible for someone who is in power and can contact the bank officials while in blockchain everything is transparent so anyone can track any details if you managed to find the wallets from where the transaction was originated. Don't forget the network is decentralized but not completely anonymous.

Meanwhile there are options to break the relation with the crypto mixers.

[Pmalek]

There are a few things you need to consider.

First of all, the ethereum address of a renowned exchange is a big reservoir which contains pooled funds from thousands of users. If you deal with a person, and you withdraw funds from your exchange wallet, it's difficult to connect a previous incoming transaction back to you. The other party doesn't know when you deposited those funds. Maybe they were deposited 1 hour before they were sent to him, or they have been on the exchange 3 years. Both are possible.

The other party also doesn't know in what quantitates the ETH you sent to the exchange was deposited, or from how many different ETH accounts. If you sent someone 1 ETH, that doesn't imply that the original transaction sent by you to the exchange was 1 + 0.008 ETH = 1.008 ETH (the 0.008 ETH is to cover the withdrawal fees). Maybe you sent 5 or 10 ETHs and made deals with other people or traded with the rest on the exchange.

What is important is that you don't give away any information regarding the time when you deposited funds to your exchange account. If the other party knows that you made a deposit 2 hours before the deal you did with him, it's a little easier for him to check blockchain data and attempt to discover your address.        

[20kevin20]

The only party able to backtrace the tx is Binance itself. Otherwise, as others say, there is another method: backtracing using similar amounts (say you gave 0.9555BTC and they withdraw 0.9550BTC - especially since a blockchain analysis company most likely knows what the withdrawal fees are).

Each user has their own coin address. But when you withdraw, the money comes out of one (or very few) address. If we both withdraw from our Binance accounts, chances are we will both receive funds from the same public address although we both deposited to two completely different addresses. According to my own experience, deposits and withdrawals usually look like this:

You depositing:

Code:

You    ----> Your partner's deposit address (a deposit of 0.5 BTC)
User 2 ----> Address B
User 3 ----> Address C

Your partner withdrawing:

Code:

Binance Wallet 1
     ----> Your partner's personal wallet address (0.4995BTC)
     ----> User 4
     ----> User 5
     ----> ...

Now backtracing your partner's funds, it looks like this: your partner has received money from Binance Wallet 1. That's all we know. If we wanted to find out who deposited money to his Binance account, the only way is either by adding the withdrawal fee to the withdrawn BTC and finding out which recent deposits to Binance's wallet fit that sum (if withdrawal fee is 0.0005BTC, we add 0.0005 to 0.4995 and we get the exact sum you've deposited to his addy, respectively 0.5 BTC) or we contact Binance directly.

The first variant probably requires some prior blockchain analysis to find out who's made the initial deposit. The latter requires being an authority and Binance complying to their request.

[Dreykku]

If you're afraid your receiver find out your identity

This is the thing. I knew someone would say that. I thought about it to understand how legitimate my concern was. But i think there is a misundersanding here. It's not that i don't want receiver to find out who i am, he already knows. The issue i've always had with some blockchains is that you not only know who sends you what (which is fine), but that with the address of the sender you can also know who else the sender sent money to and received from. I know this is the whole purpose of the blockchain but if you compare it with what we had with fiat money and bank systems until now, it would be as if you could know the whole bank account activity of someone just because he sent you some money in your bank account. How crazy and unfair that would be? People would never be ok with that. But somehow here it's fine, and i don't understand why.

I don't know how we do to send money to someone, keep a traceability on the blockchain for he and I, but keep all the others transactions hidden to him on my wallet (and of his wallet to me also). I don't see how, unless we create a specific wallet for each individual we sent money to in our life and they do the same, which is maybe the least optimal thing ever.

Just wanted to answer to that. I'm reading the rest of your messages for now, thanks for your insights guys.


Edit :

Alright, so, i guess i was kinda right. We can't. And everyone with a bit of dedication of simple software could find our address when we send anything from exchange to someone, especially if we had multiples transactions with that someone. Why in the world we ever want that? and what could we do to prevent that full transparency without compromising the integrity and goal of the blockchain? Like more of semi transparent semi decentralized blockchain, where transactions would be only known to those who are included in the transaction. I mean, do you really see the world of tomorrow giving up fiat money to use the blockchain where everyone could know how everyone else is spending their every bit of money? Who would want that? And maybe keep the regular blockchain for public transactions, administrative, legal and judicial stuff.

It would be like being able to read all the past and future transaction of someone's else bank account just be receiving fiat money from that someone.

Is this how it works? Am i missing something? Is this how it's supposed to work ? I know Ethereum blockchain is supposed to be transparent, but that's from one personal wallet to another.

Fairly, it is not possible to find the transaction list of a bank account just only with a transaction received on your side but it is possible for someone who is in power and can contact the bank officials

Yeah, but that keeps your personal transactions secret from 99.9% of the population. Whereas on the blockchain it's not secret to 100% of the population with an internet connection. How can we keep the decentralization without giving away all our privacy one which transaction is showing or not?