Wasabi Wallet, one of the most private Bitcoin (BTC) wallets on the market, has stated that as of the next update, its CoinJoin protocol for mixing BTC, will begin to discriminate transactions coming from what they consider to be criminal activities.
The communication of this news was given this March 14 through the Twitter Wasabi official. There it is announced that zkSNACKs, developer of the wallet, will apply a filter within the mixing process.
CoinJoin is a protocol in which funds from different users are mixed in a single transaction. This practice improves the privacy of assets by reducing the levels of traceability they may have. With CoinJoin the possibility of knowing the real origin and destination of the BTC is limited.
This decision has unleashed a controversy within the bitcoiners communitybecause, being a measure that violates privacy, regardless of the origin of the funds, it opens the possibility that any user may have their transactions censored.
Although, for now, Wasabi Wallet and zkSNACKs have not published the reasons for these new policies that threaten privacy, it can be assumed that it is due to alleged pressure from the States.
zkSNACKs is a company currently registered in Gibraltar, a British Overseas Territory that has policies on tracking funds, according to the recommendations of the Financial Action Task Force (FATF) enacted in October last year.
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Bitcoiner community responds
In response to the tweet posted by Wasabi Wallet, part of the bitcoiner community commented that this decision has turned Wasabi into a “centralized and useless” entity. Since, basically, it would label the different transactions that are processed in it, completely breaking what Bitcoin means.
In response to the controversy, Samourai Wallet, another of the representative wallets in the field of privacy in Bitcoin, explained the operation of CoinJoin. They indicate that this does not represent any type of centralized exchange for mixing BTC, since the mixing process is carried out through the exchange of information between users.
In this aspect, according to Samourai, that a wallet decide Censoring transactions is “the radical intrusion of the State in the life of the citizen”, since it limits the free flow of information.
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As a radical response to the measure taken by Wasabi Wallet —and taking advantage of the fact that it is an open source development—, a group of users decided to create a new “Wasabi”: Wasabi BTC.
This new wallet will not include the controversial blacklist that they intend to implement. It should be made clear to the reader that this is an independent development, whose creators are unknown.. Also, the corresponding Twitter account is not more than 12 hours old, and the web domain does not yet exist.
Due to the lack of audits that this wallet could have, it is recommended to avoid its use for the time being.
Wasabi and the case of The DAO hacker
Something quite curious that happens with this decision by Wasabi is that it occurs weeks after the name of the wallet appeared in the investigation that found the alleged whereabouts of The DAO hacker, one of the biggest hacks suffered within the ethereum network.
As reported by CriptoNoticias, the investigation reported how the hacker used Wasabi Wallet and its CoinJoin protocol to try to launder about 282 BTC (USD 9 million at the current rate). However, thanks to Chainalysis tracking tools, it was possible to find the origin of the funds, and consequently the possible identity of the hacker.
This showed that, to a certain extent, this privacy tool ended up not being useless for the hacker, since it was possible to find his trail despite having mixed the BTC in the CoinJoin.