On June 8, Chainalysis announced support for Zcash (ZEC) and Dash (DASH) privacy coins, making it easy for law enforcement to track them.

Calling Dash a privacy room is a misnomer

The company claims that it can trace the vast majority of Zcash and Dash transactions due to the fact that most users do not use any privacy enhancing features. As far as Dash is concerned, Chainalysis goes so far as to say that calling it “privacy coins” is a misnomer, he concludes:

“In fact, independent wallet software provides more advanced forms of CoinJoin that are used with major cryptocurrencies not labeled as privacy coins, such as Bitcoin, Bitcoin Cash, and Litecoin.”

Dash is happy with Chainalysis support

In a statement to Cointelegraph, Ryan Taylor, CEO of Dash Core Group, said:

“Dash offers users the option of enhanced privacy transactions because user security is important to the widespread adoption of cryptocurrency, and it is there for end users who value this functionality. At the same time, Chainalysis is a leading provider of advanced AML and blockchain analysis. This is necessary for money services businesses that need to balance privacy needs with compliance needs.In the end, both promote the safe use of cryptocurrencies, while ensuring access to existing financial markets, I am therefore delighted that Chainalysis has chosen to implement Dash in their platform. “

This level of satisfaction from the CEO of an organization that sells privacy to its users is somewhat confusing. It’s understandable that greater compliance can accelerate the adoption of a cryptocurrency; however, this preparation could alienate many users.

Privacy exhibits face a difficult dilemma which, in layman’s terms, could read: comply or die of government suffocation. For example, several exchanges have recently written off Monero. It is understandable that governments around the world want to have more transparency on cryptocurrencies, which can be used for illicit purposes. At the same time, with the ever-increasing reach of government, some people feel a greater need for privacy protection tools.

Now at least Dash looks less like one of those tools. Likewise, Zcash uses zk-SNARKs, which should theoretically allow maximum privacy for users. According to Chainalysis, only 0.9% of its transactions are fully protected:

“So even though the obfuscation on Zcash is stronger due to zk-SNARK encryption, Chainalysis can still provide the transaction value and at least one address for over 99% of ZEC activity.”

Zcash declined Cointelegraph’s request for comment.

Recently, researchers at Carnegie Mellon University concluded that 99.9% of Zcash transactions and 30% of Monero (XMR) transactions were traceable.

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