Monero scandal: Are attackers undermining privacy?
Another scandal surrounding Monero’s security. Will attackers be able to undermine the privacy of the blockchain? An expert from Chainalysis believes this is not possible. Why a user was nevertheless tracked down and the scene is in turmoil.
Monero scandal: Are attackers undermining privacy?
Another scandal has broken out involving Monero (XMR). A user discovered malicious nodes that are obviously being used by attackers to undermine the privacy of the blockchain.
The operators of such nodes obviously include companies such as Chainalysis, which are involved in the analysis of blockchains. Chainalysis makes it its mission to break down pseudonymous and anonymous transactions.
Decrypting Monero is considered particularly difficult. Thanks to the strong encryption of the blockchain, XMR is the most popular privacy coin on the market.
Reddit user __lt__ published a post a week ago in which he commented on an internal video from Chainalysis. The video was created in August 2023 as part of a webinar.
Jake DeBacher, a researcher in the Government Solutions department, explains the current state of affairs when it comes to dealing with XMR. The essence of the talk is that it is possible to extract individual data via the blockchain. Complete decryption is not conceivable.
“It is not possible to link two or more transaction outputs to the same identity. Monero is generally untraceable. We cannot clearly determine the origin of a transaction. In addition, the amounts sent are confidential,” explained DeBacher.
Some data that attackers were able to access in the past can no longer be extracted due to technical improvements. According to Chainalysis, this includes information about users’ IP addresses.
These IP addresses have been a key clue for the company in the past. They were obtained by running malicious nodes on the Monero network through which users had connected. XMR aims to prevent IP addresses from being linked to users through a feature called Dandelion.
“Dandelion was launched in October 2020. Anything that happened after that point is much less significant in the IP observations we make,” DeBacher said.
Outcry among Monero users: This is where the problem lies
Although DeBacher stated in his talk that decrypting Monero was not possible, Chainalysis’ research led to an arrest. The operator of a darknet marketplace used a Chainalysis node, which exposed his IP address.
The operator also used a swapper called MorphToken, which also collected information about him and shared it with law enforcement authorities. This made it possible to identify and prosecute the person.
A headline in the newspaper Cointelegraph has left many Monero users feeling that the blockchain’s capabilities are misrepresented, leading to an outcry among some readers.
Why malicious nodes could help Monero
In its tests, Chainalysis uses attack vectors that anyone could replicate. By running malicious nodes, the company realistically tests the blockchain’s capabilities.
Overall, however, Chainalysis’ approach could be useful for the security of the cryptocurrency . If Monero’s privacy becomes inadequate due to the attacks, the project would fail. In order to remain confidential, the developers must therefore develop the necessary solutions.
At least one malicious node operated by Chainalysis was identified as node.moneroworld.com . Users should therefore avoid connecting to this node. xmrnode.com is also considered suspicious.
At the time of writing, the node is even listed at the top of the popular website monero.fail and has thus been found by many users.
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The Monero price has obviously suffered from the debate. As one of the few of the 100 largest cryptocurrencies, XMR is down 3.40 percent in the weekly trend.
