Bitcoin

Dash disagrees with ShapeShift Privacy Coin Removal

The cryptocurrency exchange ShapeShift recently removed three privacy coins: Dash, Zcash (ZEC), and Monero (XMR). This was an unexpected move to say the least, given the exchange’s historic commitment to privacy.

As a non-custody platform Shapeshift did not initially impose user identification requirements on merchants, although this began to change with the gradual introduction of a mandatory membership model that complies with the rules of Know Your Client from 2018.

Why did they decide to remove Dash, Zcash, and Monero when other exchanges like Coinbase, Kraken, and Binance.US are still listing these coins? In a statement shared with Cointelegraph, Glenn Austin, CFO of Dash Core Group, said he found the delisting “particularly frustrating because it could have been avoided entirely with a simple 10-15 minute phone call”.

Dash disagrees with ShapeShift Privacy Coin Removal
Dash disagrees with ShapeShift Privacy Coin Removal

Austin believes the delisting amounts to “an educational problem”.. Although the reasons for the delisting have not been officially clarified, Austin has speculated that the move could be influenced by the currency, which was mentioned twice in the Justice Department’s recently released “Cryptocurrency Enforcement Framework”.

In both cases, Dash was cited alongside Monero and Zcash as an example of a cryptocurrency enhanced by anonymity. The Justice Department identified the use of these coins as a “high risk activity indicative of possible criminal behavior”.

Dash argues that his coin isn’t really a privacy coin. The group cites leading law firm Perkins Coie’s assessment in September 2019 that “the widespread perception that Dash is a” privacy coin “is likely a legacy of its former nickname” Darkcoin “and its accuracy does not accurately reflect actual functionality”. Perkins Coie has argued that Dash has the same functionality as Bitcoin (BTC) in this regard. Austin stated:

“There are several privacy enhancement techniques that can be implemented on top of any public blockchain, including features such as out-of-chain transactions, addresses or protection amounts, mimblewimble, tumbling / mixer and coinjoin. CoinJoin is the only data protection feature currently available in Dash wallets. Bitcoin also has many wallets that support CoinJoin. “

Chain analysis, A leading blockchain analytics firm agrees that the privacy coin is “a misnomer for Dash” from a technical perspective.. The company that provides investigative and compliance support to Dash Core Group has emphasized that “independent wallet software offers more advanced forms of CoinJoin that are used with major cryptocurrencies that are not marked as privacy currencies, such as bitcoin, bitcoin cash and litecoin” .

Austin goes even further with this argument. Aside from emphasizing the Dash-related misunderstandings, he argues that supporting off-chain transactions in Bitcoin over the Lightning Network, as well as Bitcoin’s proliferation in dark web markets, makes it a higher risk from a regulatory perspective. Software like Chaumian CoinJoin, which can be used with Bitcoin wallets but not with Dash wallets, is an even more sophisticated means of hiding data from other participants in the network.

“We submitted all of this information to FinCEN, but it appears the message was never passed on to the Justice Department,” Austin said. The company has also reached out to ShapeShift, stating that it will continue the matter until it is resolved.

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