Wasabi blacklisting update - open letter / 24 questions discussion thread

[suchmoon]

Introducing HorseRadish, the CoinJoin/JoinMarket privacy wallet that doesn't cockblock any UTXOs...

Really, what's wrong with offering two or more products that provide different services?  Lincoln, Mercury, Ford, Mazda...  They all compete against each other, but they're all owned by the same entity.  How difficult would it be to have two separate products/services that offer different types of obfuscation?

It looks like wasabists don't think users would care (and they're probably right) so it's not worth splitting scarce liquidity into multiple services. And it doesn't look like there are any competitors lining up to ridicule them for chain analysis and to take their non-caring users.

BTW Mercury is dead and Mazda is not owned by Ford anymore

[1715057926]

1715057926

[DireWolfM14]

It looks like wasabists don't think users would care (and they're probably right) so it's not worth splitting scarce liquidity into multiple services. And it doesn't look like there are any competitors lining up to ridicule them for chain analysis and to take their non-caring users.

It might still be too early to count out any competition, but Wasabi's dwindling download numbers suggest that customers do care.

BTW Mercury is dead and Mazda is not owned by Ford anymore

Say What?  Next your going to tell me that Fiat owns Jeep!?!?!  

[DaveF]

Thinking about it a bit more. The *only* reason I could see a "financial institution" caring about using a service like this is to hide the amount of BTC their clients have, If everything is in one big mix then when they send others can't really know what else they have. Their keys stay with the institution but when sending it's all muddled.

Other then that I go back to the individuals with a lot of BTC

Or, something happened that they don't want to or just can't talk about. So they are doing this.

But lets face it, even if we hate the outcome it is fun to speculate.

-Dave

[suchmoon]

It might still be too early to count out any competition, but Wasabi's dwindling download numbers suggest that customers do care.

Speaking of, is it even available in e.g. Play Store? I can't find it.

I'd like to believe that users care but I don't see any discussion about it in their subreddit.

Say What?  Next your going to tell me that Fiat owns Jeep!?!?!  

Not anymore LOL

[witcher_sense]

Despite the fact that Wasabi 2.0 made CoinJoins more affordable for the average user (one no longer needs 0.1 btc to participate) , the volume of mixed bitcoins continues dropping steadily.


Source: https://www.bitcoinkpis.com/privacy

And the others tend to already blacklist mixed funds as a whole (which is utterly stupid), or go by "shades of gray" (I don't know how to say it better) and by the rule "the stream's water can be considered clean if it went over 7 stones" (again, I don't know how to say it better and more concise).

Which is another good point as to why blacklisting is just plain wrong, in addition to the point I made above in which it is all based on guesswork. What happens if I combined a tainted input with a clean input in the same transaction? What about a tainted input with 100 clean inputs? Are all the outputs still tainted? Are they all 1% tainted? What about if a tainted input moves through 5 transactions? What about 100? What about 1,000? Is it still tainted? When does it become clean again? We've been able to trace some stolen coins to Binance. Does that mean the entirety of Binance's hot wallet is tainted? Or does the taint magically disappear once Binance have touched the coins?

Go far enough in to the future, and every bitcoin in active circulation will be tainted in some way or another.

Curiously, I used pretty similar reasoning as you when tried to explain why it is utterly stupid and absurd to deem bitcoin transactions or particular UTXOs dirty, tainted, or non-fungible.

Another shower thought about tainted bitcoins and why it is pointless to call certain bitcoins dirty, illegal and for criminals. Imagine a transaction coming from twitter hackers, for instance. All the UTXOs involved in given transaction are now considered illicit. All bitcoins are now dirty. But what about a fee hackers need to pay in order to have their transaction mined?

Basically, imaginary twitter hackers used dirty bitcoins to incentivize miners, they merely bribed them. Fees is a part of coinbase transaction  (coinbase transaction is a transaction with which miners are paying rewards to themselves, it consists of block subsidy (new bitcoins) + transactions fees (sum of all commisions from all included transactions).

What is really interesting about a coinbase transaction is the fact it does not consume any existing UTXOs. What it means is that surveillance company like Chainalysis cannot figure out what part of fees included in coinbase transaction is still dirty. Now they have to call all bitcoins from given coinbase transaction illicit. Even "virgin bitcoin" can now be called illicit because some of the transactions included in a block were involved in criminal activity.

Mining can now be considered a means to launder money, since miners take dirty bitcoins and return clean ones via coinbase transactions. Every block is now tainted, demonized and is potentially serving criminals. Bitcoin is a tool for criminals. If your transaction is in the same block as imaginary twitter hackers' one, you are in trouble, you are criminal.

But I came to a different conclusion, namely, that eventually, given bitcoin's active circulation, all coins once again become "pristine" since they are continuously being "laundered" by miners via transaction fees. I think this is part of the reason why mining in general and PoW, in particular, are being targeted by the ESG mafia - this is essentially a legal and very efficient way to get rid of "dirty" bitcoins and thus destroy completely stupid narratives of taintness and non-fungibility of money.


However, if miners stop acting, as LoyceV put it, "as if bitcoin is fungible" (e.g. reject transactions from OFAC list or refuse to build block-candidates on top of blocks containing transactions from such addresses), we are in trouble.

[o_e_l_e_o]

Despite the fact that Wasabi 2.0 made CoinJoins more affordable for the average user (one no longer needs 0.1 btc to participate) , the volume of mixed bitcoins continues dropping steadily.

Note that the same site also reports a decrease in volume for Samourai and JoinMarket for the last week, though. Not sure if it's a problem with their data or due to the market conditions, but I don't think we can take this as evidence of falling Wasabi volume.

But I came to a different conclusion, namely, that eventually, given bitcoin's active circulation, all coins once again become "pristine" since they are continuously being "laundered" by miners via transaction fees.

Which again just highlights how stupid the whole thing is. If we take tainted coins and turn them in to a fee, then all services agree those coins are now clean since they can no longer be accurately tracked due to being consolidated with other coins. But for some reason, the exact same logic does not apply to coinjoins? Because reasons?

[tainted_love]

What is chain analysis?  I searched multiple engines and two common results are companies selling a service. One of the companies claims to be building trust in blockchains lolz. The blockchain is already trusted that's the point.  By what method to these companies determine which coins are tainted? Are their methods audited for accuracy?  Why are they trusted?  Does Wasabi Wallet do their own chain analysis?  Sorry for all the questions.

[witcher_sense]

What is chain analysis?

It is when individuals or companies take advantage of the fact that blockchain is fully transparent, trying to figure out and subjectively interpret what is occurring inside it.

I searched multiple engines and two common results are companies selling a service.

Yeah, some companies make money selling their subjective interpretation of what's happening to other companies, exchanges, law enforcement agencies, governments, dictators, and also surveillance-oriented wallets like Wasabi Wallet.

One of the companies claims to be building trust in blockchains lolz. The blockchain is already trusted that's the point. 

This one is a ridiculous claim that they employ to siphon money off from people who naively believe surveillance companies provide valuable services and actually know what's going on.

By what method to these companies determine which coins are tainted?

The point is they do not "determine", they gave themselves the power to unilaterally decide which coins are to be deemed clean and which aren't.

Are their methods audited for accuracy? 

How would you audit subjective interpretations?

Does Wasabi Wallet do their own chain analysis? 

Of course, they do, how else can they determine that some inputs came from Wasabi 1.0 or that particular UTXO has a particular anonymity set if not by looking at analyzing blockchain data?

[o_e_l_e_o]

Are their methods audited for accuracy?

Just to add to witcher_sense's good answer above: The methods aren't audited because their methods aren't even known. Most of these services will just take an address one of their paying customers feed them, and then return some breakdown of the percentage of coins from various places, such as centralized exchanges, DEXs, casinos, scams, etc., with absolutely no information about how they reached that conclusion, and then their customers will treat that as gospel. There's nothing stopping anyone from spinning up their own blockchain analysis service and charging extortionate rates to tell other people where you think coins have come from based on complete guesswork. And as we regularly see, they often get things wildly wrong.

There was a post I made a few months ago about how one such service shows that large amounts of coins in the hot wallet of large centralized exchanges are "tainted": https://bitcointalk.org/index.php?topic=5395035.msg59905002#msg59905002

[LoyceV]

There's nothing stopping anyone from spinning up their own blockchain analysis service and charging extortionate rates to tell other people where you think coins have come from based on complete guesswork.

I can do that for free Here's a list of all taint free Bitcoin addresses! I can evey share how I came to this conclusion. It's quite simple: 1BTC=1BTC

[PrivacyG]

By what method to these companies determine which coins are tainted? Are their methods audited for accuracy?  Why are they trusted?  Does Wasabi Wallet do their own chain analysis?

Mind boggling.  Even if local authorities did the investigation instead of whoever Wasabi is working with, how many times has the wrong person been called a criminal and thrown in jail for doing nothing wrong?  On the other hand, how many of the real criminals got a pass and never been put in jail just because they were wealthy and powerful, just because they bribed the right party?

Why would Blockchain Analysis be ANY different if this is happening at the highest levels with authorities, politicians and everyone else involved?

Look, maybe if there was a way to stop all crimes with 100% accuracy I would support it.  Hell, put it straight on top of Bitcoin's blockchain if that is the case.  But if we are talking about freedom and censorship free, there is no way we can start censoring Bitcoin users and transactions based on guessing and investigations with who the heck knows how much accuracy and still call it censorship free because that is so contradictory and then Bitcoin becomes useless really.

If I get to be treated as a criminal and wrongfully censored for my actions then why the hell would I even use Bitcoin at all when I have banks that under some conditions are faster and even cheaper than Bitcoin is.  They can censor me, they can question me.  I sure do know they can.  And at least I then know who I am talking to and what I put myself into rather than finding myself in a situation where I can not move money around due to a stranger telling another stranger that I am not a good guy.

After all, Bitcoin is here to set us free from the heavy chains of our current monetary system.  We are a community of people who supposedly and theoretically want just that, if we exclude the speculative investors.  I do not mind Bitcoin sitting at $20,000 for the next 20 years.  I just want it to offer me the same freedom it did so far.

But do not try making me accept that censorship should be part of a censorship free system because that immediately shows me what your intentions are and never in this life will I agree censorship is fair or works against crime.  Because at about any given time in history we know that a little censorship always led to more censorship and then ultimately led to some of the worst rules, regimes and choices that were definitely not for the people but against it.

-
Regards,
PrivacyG

[Pmalek]

After all, Bitcoin is here to set us free from the heavy chains of our current monetary system.

But that's exactly what you are not supposed to be in their eyes. That's why there is so much focus on destroying what Bitcoin is and it has nothing to do with stopping criminals, pedophiles, and whatnot. It's about stopping all of us using and trusting something out of their reach. It's the same as with the POW mining objectors. It's not about having people move to clean energy sources or incentivizing them to do so, it's about attacking a core feature of Bitcoin in an attempt to give it a hard hit that would be difficult to recover from.

[o_e_l_e_o]

I can do that for free Here's a list of all taint free Bitcoin addresses! I can evey share how I came to this conclusion. It's quite simple: 1BTC=1BTC

Don't do it for free, though! You can extort the clueless charge $0.50 - $1 for every single address someone looks up! That's what AMLBot charges for their provably incorrect guesswork, after all.

Why would Blockchain Analysis be ANY different if this is happening at the highest levels with authorities, politicians and everyone else involved?

Here's the thing, though: Wasabi don't care. They are not doing this out of some misguided attempt to stop criminals or anything like that. They are doing it simply because they want to protect their income at the expense of their users.

That's why there is so much focus on destroying what Bitcoin is and it has nothing to do with stopping criminals, pedophiles, and whatnot.

Absolutely this. Just like when they push mass surveillance under the guide of "stop the terrorists" or "think of children", despite there being absolutely no evidence that mass surveillance actually prevents any crimes whatsoever. This isn't about preventing crime; this is about control.

[NotATether]

Regarding the murderer/pedo analogy:

If I had a restaurant it is not my duty to not service them because the restaurant as a company is not responsible for apprehending these people, that's the police's responsibility!

Let's put this in slightly less extreme terms:

If there is a law in some country forbidding LGBT+ activity (or maybe black people if this was still 1950), and one of them comes to my restaurant, it is not my obligation to deny them service because the restaurant is not the law enforcement. The restaurant is responsible only for providing their customers with food & drink, and nothing else.

So now that we have gotten that out of the way, let us get to the crux of the issue.


The entire debacle of zkSNACKs blacklisting certain UTXO inputs from their co-ordinater is apparently due to pressue put on them (by who, specifically?) to stop serving what they call "suspect criminals".

This particular term, these two words, are so loaded that it is almost impossible to understand exactly who is being blocked, which is imparative if somebody wanted to provide some real security.

- It could refer to the US government's No-Fly list.
- It could refer to the CIA's own "criminal and suspect criminal" list.
- It could also refer to some hastily drawn up notes in some governor or chain analysis chairman's office which violently hate some partcular group of people that they want to classify them as criminals [example: Texas state government vs. women who want abortion => they are magically criminals].

The word "criminal" is thrown about by everyone from protestors to high cabinet officials to news reporters & guest commentators to your 70-year-old grandpa, even, who all have different notions about who represent criminals.

That's why you see such strange things as people welcoming the Taliban to afghanistan, or happily welcoming suppressions to non-binaries/vaccines/journalists/bitcoin. Because their definition of criminals is wildly different from our own. In some cases, the contrast between them is even a color-inversion.

So that is why that you should not trust people's definitions of the word "criminal" apart from an official government statement (and intelligence agencies who are too cowardly to confirm official statements do not count [this bold part was supposed to be in the original post, but the electricity went out for hours before I could finish this sentence and I forgot to include it afterwards. Fuck.]).

The community is still not very happy that you have created a UTXO blacklist, even if it came from institutional pressure and its not implemented yet. You should not be buckling down to such pressure and bending to people's own definition of "criminals". We also understand that you are not the perpretrator of such change - it came from your sponsor.

But since you have already decided which path to take, you need to follow it straightly, so that Wasabi can stay in one piece when it reaches the other side. You are at the point of no return, and there is no going back.

edit: spelling snafu

[BlackHatCoiner]

I've stopped trusting Wasabi developers since the blacklisting update, but thanks to this letter, I can confirm how clown they are. I haven't seen such childish and undignified responses for a while, especially that flawed analogy with the restaurant.

Dude, the restaurant's job is to serve you food. Not to protect your privacy. Do I need to remind you, you have a "PRIVACY BY DEFAULT" sign up there? Your default coordinator is said to preserve privacy at all times, remember? Cut the crap.

We're talking about zero coding ethos.

[n0nce]

There's nothing stopping anyone from spinning up their own blockchain analysis service and charging extortionate rates to tell other people where you think coins have come from based on complete guesswork. And as we regularly see, they often get things wildly wrong.

This just gave me the idea to make a website where you put in a transaction ID and it gives you a 'taint score' (just like those other blockchain analysis services), but this score is simply always 100%, with a nice green background and informative text saying 'This UTXO is wonderfully clean; it is yours if you have the private key to spend it and you can send it anywhere you like.'..

Then whenever someone is accused of having dirty coins, they can pull up a screenshot of this site and it will be 'word against word'.

Edit: I should read all replies first...

There's nothing stopping anyone from spinning up their own blockchain analysis service and charging extortionate rates to tell other people where you think coins have come from based on complete guesswork.

I can do that for free Here's a list of all taint free Bitcoin addresses! I can evey share how I came to this conclusion. It's quite simple: 1BTC=1BTC

[NotATether]

This just gave me the idea to make a website where you put in a transaction ID and it gives you a 'taint score' (just like those other blockchain analysis services), but this score is simply always 100%, with a nice green background and informative text saying 'This UTXO is wonderfully clean; it is yours if you have the private key to spend it and you can send it anywhere you like.'..

Then whenever someone is accused of having dirty coins, they can pull up a screenshot of this site and it will be 'word against word'.

Heh, I think I can spin up a JS template on a subdomain of mine for that , but my dev schedule is as notoriously congested as a traffic jam.

[LoyceV]

This just gave me the idea to make a website where you put in a transaction ID and it gives you a 'taint score' (just like those other blockchain analysis services), but this score is simply always 100%, with a nice green background and informative text saying 'This UTXO is wonderfully clean; it is yours if you have the private key to spend it and you can send it anywhere you like.'..

That's not enough for taint believers, you should add the parent addresses to convince people they're also 100% clean Even better if you can add some history: "parts of these funds were mined in the years 2012, 2014 and 2018". All 100% clean, of course

[o_e_l_e_o]

So that is why that you should not trust people's definitions of the word "criminal" apart from an official government statement

I wouldn't trust that either. There are governments in the world who enforce capital punishment for LGBT individuals, for speaking out against the government, or for drinking alcohol. And anyone thinking "Well, that would never happen in the West" - there are various US states which now criminalize woman seeking life-saving healthcare and providers for providing that healthcare. Governments are not the arbiters of morality or truth, and Wasabi (and their blockchain analysis buddies) certainly aren't either.

Then whenever someone is accused of having dirty coins, they can pull up a screenshot of this site and it will be 'word against word'.

This is not a bad idea, especially when we consider that many entities which buy in to taint analysis do not have the slightest clue as to how taint analysis actually works or how the whole thing is (bad) guesswork.

Even better if you can add some history: "parts of these funds were mined in the years 2012, 2014 and 2018". All 100% clean, of course

Either that or go the other way to highlight the stupidity of the whole thing. "Approximately 2% of the coins in this output were once used in a casino, and have transacted through 592 addresses in over 10 years since then!"

[LoyceV]

Either that or go the other way to highlight the stupidity of the whole thing. "Approximately 2% of the coins in this output were once used in a casino, and have transacted through 592 addresses in over 10 year since then!"

2%? Why not add it all up? 230% of the coins have been used in a casino, 412% has been mixed, 100% came from miners and 0.0002% was touched by LoyceV