A number of different blockchains have the ability to obfuscate transactions – those made using ‘CoinJoin’ on the BTC chain – to make blockchain analysis more difficult for hackers, fraudsters and money launderers to be traced. This includes; BTC, BCH and DASH, amongst others.
CoinJoin is a method by which cybercriminals launder funds or otherwise attempt to obfuscate the path of transactions by using a utility of an underlying blockchain itself. It combines transactions from multiple users into one big transaction with multiple inputs and outputs. This is opposed to mixing services which are a website or DApp designed to mix funds from different users.
Because CoinJoin transactions are a utility of a blockchain rather than a service, transactions utilising the former are on average cheaper. But this is of little difference to cybercriminals using them to attempt to cash out.
Although CoinJoin transactions are more difficult to trace than mixing services, Coinfirm’s forensic accounting methodologies of analysing crypto crime enable the firm to trace CoinJoin transactions.
Similar to funds sent from mixing services, funds that have used CoinJoin transactions being sent to regulated entities such as centralised exchanges or custodians will often be frozen. This is due to the fact that it is not possible for a centralised entity to be sure of the providence of the funds; they could be the proceeds of child pornography, human trafficking or other heinous crimes.
Coinfirm’s AML Platform has 6 separate risk flag indicators related to CoinJoin transactions including; “Addresses Participating in a CoinJoin Transaction”, “Address with part of incoming transactions in close proximity to address participating in one or more CoinJoin transactions”, and “Address with significant part of outgoing transactions in close proximity to address participating in one or more CoinJoin transactions.” These risk flags enable Coinfirm’s partners and clients to monitor wallets for funds with in-coming and out-going transactions utilising this privacy technique to freeze them.
From the three chains Coinfirm analysed for CoinJoin-type transactions, Dash users are most inclined to use the funds obfuscation method, with 4.8% of all transactions using the feature, whilst Bitcoin Cash users used the feature the least, with just 0.018% of all transactions utilising CoinShuffle.
On the BTC chain – at block height 713,219 (14:19 UTC 08.12.2021) – 185,369 transactions have been private send transactions (CoinJoin) out of a total of 693,337,110 transactions (0.027%). Out of a total of 901 million addresses on the BTC chain, 4,761,824 have used private transactions (0.52%).
On the BCH (Bitcoin Cash) chain – at block height 715,789 (14:36 UTC 08.12.2021) – 62,633 transactions have been private send transactions (CoinShuffle) out of a total of 349,348,942 transactions (0.018%). Out of a total of 181 million addresses on the BCH chain, 649,984 of them have used private transactions (0.36%).
On the DASH chain – at block height 1,584,841 (17:08 UTC 08.12.2021) – 1,910,654 transactions used Dash’s PrivateSend feature out of a total of 39,749,219 transactions (4.8%).
When DASH first ICOed in February ‘14 at USD 0.20 (with an ATH of USD 1,500 in 2017) it was the ‘original’ Privacy Coin (with MONERO ICOing not long after in May ‘14), but has recently worked hard to shed its image as such, with the team turning their focus on creating an efficient payment system (DASH’s average transaction fee is USD 0.1 vs ETH’s USD 3.9).