The default Wasabi Wallet coordinator will start censoring "illegal" UTXOs

[witcher_sense]

The tweet: https://twitter.com/wasabiwallet/status/1503091503207432193



Essentially, they will start refusing UTXOs associated with illegal activities, preventing them from participating in CoinJoin transactions. The list of what they are considering illegal can be found here: https://twitter.com/ODELL/status/1503141547071754242

It is not clear how they will determine if certain UTXOs are illegal or not, but it all definitely can be called an attack on fungibility and privacy. If this news is true, the default coordinator run by zkSNACKs company is no longer a reliable solution to coinjoin your transactions.

[pooya87]

This is exactly why I always complain whenever I see even a small trace of centralization (mainly about DEX and the fact that there is a central server involved in it somewhere).

So where is this censorship going to stop? Are they going to say we are no longer accepting users from country A, B, C, D? Or claim the government ordered them to censor a list of addresses?

[mk4]

So where is this censorship going to stop? Are they going to say we are no longer accepting users from country A, B, C, D? Or claim the government ordered them to censor a list of addresses?

Thinking realistically — it's not going to stop. And yea, I'm pretty sure it's either due to government intervention or that they're taking extra safety precautions because they expect the government to interfere. It totally sucks, but I really don't blame them for the decision.

[n0nce]

So where is this censorship going to stop? Are they going to say we are no longer accepting users from country A, B, C, D? Or claim the government ordered them to censor a list of addresses?

Thinking realistically — it's not going to stop. And yea, I'm pretty sure it's either due to government intervention or that they're taking extra safety precautions because they expect the government to interfere. It totally sucks, but I really don't blame them for the decision.

I think that's one of the reasons Satoshi actually disappeared. If you've got a centralized team, no matter how decentralized your software is, governments will have a weak spot to put pressure on and they'll sooner or later have to cave in. It's sad, since I like to give developers the benefit of the doubt that they don't want to play along.

[mk4]

I think that's one of the reasons Satoshi actually disappeared. If you've got a centralized team, no matter how decentralized your software is, governments will have a weak spot to put pressure on and they'll sooner or later have to cave in.

Yes. To be fair with Wasabi/zkSNACKs though, they never claimed to be decentralized in the first place, no? Their software is just non-custodial.

It's sad, since I like to give developers the benefit of the doubt that they don't want to play along.

It is sad, but it's either you cooperate or you get shut down; or worse, you get put to jail.

[pooya87]

It is sad, but it's either you cooperate or you get shut down; or worse, you get put to jail.

There is always a third option which is full decentralization and full transparency.
Unless the dev lives in a traditional dictatorship (instead of the modern dictatorship) they can always be transparent about everything including if the government has put any pressure on them to change any part of the open source code they've released and also being open source and decentralized, any such change would be found out immediately.

[witcher_sense]

that they're taking extra safety precautions because they expect the government to interfere.

According to this tweet, they "are trying to protect the company and the project by minimizing the amount of these hackers and scammers using the coordinator and getting us in trouble. This should be in the rights of the company to do but believe me, none of us are happy about this."

Perhaps they are afraid that Russian oligarchs will try to circumvent sanctions by obfuscating their transactions with Wasabi Wallet CoinJoins?

Anyway, what options do users, who want their transactions coinjoined with Wasabi Wallet, actually have?

1) Should they use other mixing solutions like centralized mixers before sending their funds to Wasabi?
2) Should they create a sufficient number of hops artificially before sending funds to Wasabi?
3) Should they start looking for, or building their own, custom, more decentralized, coordinators?
4) Maybe they should switch for other CoinJoin implementations like Whirlpool or Joinmarket and forget about using Wasabi Wallet?

The precedent is set: bitcoin wallet developers and providers now get to decide which transactions are accepted in their wallet and which are not. Bitcoin is not fungible anymore, even on a non-custodial wallet's level.

[PrivacyG]

Wow, this sucks.  It confirms previous fears of mine that if they can not censor Bitcoin directly, they will try to do it by strictly censoring exchanges, ATM's, wallets et cetera.  If and when Bitcoin gets a fully working user friendly and fully decentralized Atomic Swap mechanism with Monero, this problem will be gone as it allows you get to privacy immediately without having to rely on trust or censored coordinators.  That is unless GitHub gets censored too..

Anyway, what options do users, who want their transactions coinjoined with Wasabi Wallet, actually have?

1) Should they use other mixing solutions like centralized mixers before sending their funds to Wasabi?Wallet?
2) Should they create a sufficient number of hops artificially before sending funds to Wasabi?Wallet?
3) Should they start looking for, or building their own, custom, more decentralized, coordinators?
4) Maybe they should switch for other CoinJoin implementations like Whirlpool or Joinmarket and forget about using Wasabi Wallet?

1. If 'illegal' UTXOs are banned, then we can safely assume coins coming out of mixers will be banned as well.
2. This seems to be the best option.  I think Samourai already has this option of generating artificial hops?  I highly doubt an 'illegal' UTXO that has been through 20-30 hops would still be banned.  That is, unless they decide to ban a UTXO and include any future address they may end up at into the ban.  This is however unrealistic, the number of non banned UTXOs will very quickly shrink to zero.
3, 4. Maybe Joinmarket, although if this is a precedent then expect Whirlpool and Joinmarket to join the censorship.

-
Regards,
PrivacyG

[mk4]

The precedent is set: bitcoin wallet developers and providers now get to decide which transactions are accepted in their wallet and which are not. Bitcoin is not fungible anymore, even on a non-custodial wallet's level.

That's probably too much of a stretch. I mean, there's a reason why it's heavily recommended for people to run their own full nodes. You've worded it as if "it's over" with bitcoin lol.

[buwaytress]

So where is this censorship going to stop? Are they going to say we are no longer accepting users from country A, B, C, D? Or claim the government ordered them to censor a list of addresses?

Thinking realistically — it's not going to stop. And yea, I'm pretty sure it's either due to government intervention or that they're taking extra safety precautions because they expect the government to interfere. It totally sucks, but I really don't blame them for the decision.

It definitely had to come from somewhere, external pressure, etc. As long as the devs are known, and their tech (in this case CJ) is used for activity enforcement's come to know of, they're going to have to comply (or face some very unsavoury penalty to be sure).

MetaMask I expected, not Wasabi so soon but yeah, probably naive to think that they could have gone on without getting tapped. Sucks ass, but we're going to have to increase the threshold for our worse expectations.

[mk4]

It definitely had to come from somewhere, external pressure, etc. As long as the devs are known, and their tech (in this case CJ) is used for activity enforcement's come to know of, they're going to have to comply (or face some very unsavoury penalty to be sure).

MetaMask I expected, not Wasabi so soon but yeah, probably naive to think that they could have gone on without getting tapped. Sucks ass, but we're going to have to increase the threshold for our worse expectations.

Things like this should definitely be expected to come at some point if you think realistically. But yea — kinda earlier than expected, but at the same time I think we already saw mixers get pursued by the authorities so I guess I'm not THAT surprised.

Anyway, wish some devs would just fork the privacy coinjoin stuff and integrate it to Bitcoin Core; if it's possible, that is.

[o_e_l_e_o]

I haven't used Wasabi for a while, but I won't be using it again.

If they are willing to ban certain inputs, then it won't be long before they are willing to cooperate with blockchain analysis and de-anonymize transactions altogether. Yet another good entity which has sold out its principles and its users. What a shame.

Still, it seems that Wasabi has never been as safe as we all think:

Using a capability that is being disclosed here for the first time, Chainalysis de-mixed the Wasabi transactions and tracked their output to four exchanges.

[dkbit98]

Hmmm just when I started testing new Wasabi 2.0 testnet version 
First we had voting for ban of proof-of-work in European Parliament and now this news concerning Wasabi wallet and zkSNACKs coordinator.
They are obviously pushing hard on all fronts and regular users don't even know how to react with all this changes related with bitcoin regulations.
I think this could move people away from Wasabi to something that I tested last year and I think it's superior privacy project called Mercury wallet.
More information can be found in Mercury wallet topic:
https://bitcointalk.org/index.php?topic=5334221.0

[suchmoon]

I used Wasabi a few times thinking it would be easier than JoinMarket... and maybe it is but that doesn't outweigh the disadvantages like minimum amounts and exorbitant fees. And JoinMarket effort is mainly just a one-time setup thing and it's reasonably safe for my purposes if used with Tor.

3, 4. Maybe Joinmarket, although if this is a precedent then expect Whirlpool and Joinmarket to join the censorship.

JoinMarket nodes decide to sign or not to sign the TX so I don't think this type of censorship would work.

If they are willing to ban certain inputs, then it won't be long before they are willing to cooperate with blockchain analysis and de-anonymize transactions altogether. Yet another good entity which has sold out its principles and its users. What a shame.

Yeah especially if they get subpoenaed. Their TOS doesn't seem to say that they don't keep logs.

[100bitcoin]

The tweet: https://twitter.com/wasabiwallet/status/1503091503207432193

This will push more people to centralized mixing services.

[BlackHatCoiner]

According to this tweet, they "are trying to protect the company and the project by minimizing the amount of these hackers and scammers using the coordinator and getting us in trouble. This should be in the rights of the company to do but believe me, none of us are happy about this."

They should protect the company, but what's the point if they don't protect the users? This is serious and requires drastic measures. Would it be possible for some to start running coordinators? I believe there could be few from each community willing to run their own. No?

[o_e_l_e_o]

Just as Samourai were right on the money a few weeks ago when they tweeted about AOPP, they are right on the money again with their tweets regarding this nonsense from Wasabi: https://nitter.net/SamouraiWallet/status/1503389170672226308

By bending the knee to reg overreach instead of fiercely fighting, especially when you have the resources to do so effectively, you tacitly accept and endorse that overreach and the next one. Give an inch and they'll take several miles.

This says exactly what I said in my post above. If they are willing to comply with this, there is no telling what they will be willing to comply with next. Instead of fighting this tooth and nail, Wasabi are rolling over and selling out their users. Even if this change from Wasabi won't affect any of your inputs, they are no longer an entity which I can trust to fight for my privacy.

Would it be possible for some to start running coordinators?

Absolutely. The coordinator code is open source, so anyone can download it and spin up their own instance. That would solve the immediate problem if everyone switched to a different coordinator, but it doesn't stop these other coordinators being pressured in to implementing the same restrictions and it doesn't change the fact that Wasabi did this in the first place instead of fighting against it.

[mk4]

Absolutely. The coordinator code is open source, so anyone can download it and spin up their own instance. That would solve the immediate problem if everyone switched to a different coordinator, but it doesn't stop these other coordinators being pressured in to implementing the same restrictions and it doesn't change the fact that Wasabi did this in the first place instead of fighting against it.

Pardon my ignorance — but how hard is it to run such coordinators in a private manner? At the very least private enough for the authorities to have a very hard time in finding you if it's the case that you didn't comply.

[pooya87]

If they really hate it, at least they should give user option to use different coordinator. I expect someone will try to run their own coordinator.

I tend to not comment on technologies I'm not familiar with but I believe that in CoinJoin protocol using a centralized coordinator is only one of the ways of doing things (the easiest way). There is another way that doesn't introduce this single point of failure.

Does the totally private version need to have a server at all? What if it gets shut down?

No. The same privacy can be achieved in a decentralized manner where all users act as blind-signing servers. This ends up needing n^2 signatures, and distributed systems are generally a lot harder to create.  I don't know if there is, or ever would be, a reason to bother with a fully distributed version with full privacy, but it's certainly possible.

In other words if Wasabi team were so worried about providing users with a privacy enhancing method, instead of "bending the knee" they should have eliminated the need for a centralized server.

[witcher_sense]

If they really hate it, at least they should give user option to use different coordinator. I expect someone will try to run their own coordinator.

Actually, there has always been an option in Wasabi Wallet to connect to your own or any other existing coordinator to be less reliant on the Wasabi team that runs the biggest coordinator. Yeah, the reason most people have been using zkSNACKs coordinator is that it is the most popular one. The more popular the coordinator is, the bigger crowd it attracts. The bigger the crowd is, the easier it is to obfuscate your transactions and harder to attack the wallet with Sybil attacks.

Here is a fork of Wasabi Wallet called https://chaincase.app/, which is available on iOS and which is running its own coordinator. You can connect your Wasabi Wallet to this coordinator using the following method: https://github.com/chaincase-app/chaincase/discussions/119

What is interesting about this is that you can participate in CoinJoin transactions with amounts as little as 0.01BTC.

In other words if Wasabi team were so worried about providing users with a privacy enhancing method, instead of "bending the knee" they should have eliminated the need for a centralized server.

It's not profitable for them to develop or run a decentralized server since in this case they wouldn't collect any fees.

If they are willing to ban certain inputs, then it won't be long before they are willing to cooperate with blockchain analysis and de-anonymize transactions altogether. Yet another good entity which has sold out its principles and its users. What a shame.

In fact, they need to cooperate with blockchain analysis to obtain information about "taint" UTXOs.