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Deanonymizing Tor Hidden Service Users through Bitcoin Transaction Analysis


#1

This is for all the bitcoin fans out there, paying “anonymously” for their marching powder. :wink:

https://arxiv.org/pdf/1801.07501.pdf

Short: It is questionable whether Bitcoin is “anonymous” (cash is still king).

ABSTRACT

With the rapid increase of threats on the Internet, people are continuously seeking privacy and anonymity. Services such as Bitcoin and Tor were introduced to provide anonymity for online transactions and Web browsing. Due to its pseudonymity model, Bitcoin lacks retroactive operational security, which means historical pieces of information could be used to identify a certain user. We investigate the feasibility of deanonymizing users of Tor hidden services who rely on Bitcoin as a payment method by exploiting public information leaked from online social networks, the Blockchain, and onion websites. This, for example, allows an adversary to link a user with @alice Twitter address to a Tor hidden service with private.onion address by finding at least one past transaction in the Blockchain that involves their publicly declared Bitcoin addresses.

To demonstrate the feasibility of this deanonymization attack, we carried out a real-world experiment simulating a passive, limited adversary. We crawled 1.5K hidden services and collected 88 unique Bitcoin addresses. We then crawled 5B tweets and 1M BitcoinTalk forum pages and collected 4.2K and 41K unique Bitcoin addresses, respectively. Each user address was associated with an online identity along with its public profile information. By analyzing the transactions in the Blockchain, we were able to link 125 unique users to 20 Tor hidden services, including sensitive ones, such as The Pirate Bay and Silk Road. We also analyzed two case studies in detail to demonstrate the implications of the resulting information leakage on user anonymity. In particular, we confirm that Bitcoin addresses should always be considered exploitable, as they can be used to deanonymize users retroactively. This is especially important for Tor hidden service users who actively seek and expect privacy and anonymity.


#2

This is why using a bitcoin tumbler/mixer and executing no more than one transaction per pseudonymous bitcoin address is so important. Mostly people either don’t know the risks (think Bitcoin is anonymous out of the box) or do know and are way to lazy to follow proper OpSec.


#3

0brand:

using a bitcoin tumbler/mixer

Assuming for sake of discussion that loosing coins is a non-risk…
Anyhow… Not sure I would want to swap my bitcoin with random strangers
using a mixer.


#4

It would be very foolish to trust a bitcoin mixing site. For every “I get paid for a good review site” there is someone writing about loosing or having their coin stolen. I’ve always mixed small amounts so it wouldn’t be that big a deal if I were to lose it. I sometimes forget to clarify things like that (risk) so users don’t see post like this and think its safe behavior. Its something I have to work on.

Honey Pot??


#5

0brand:

It would be very foolish to trust a bitcoin mixing site. For every “I get paid for a good review site” there is someone writing about loosing or having their coin stolen. I’ve always mixed small amounts so it wouldn’t be that big a deal if I were to lose it. I sometimes forget to clarify things like that (risk) so users don’t see post like this and think its safe behavior. Its something I have to work on.

Honey Pot??

Not even needed.

You’re swapping coins with someone who might have a higher target than
you have. You’d just be exchanging who’s knocking your door. If you tell
them “oh, but I swapped coins” may still lead to repercussions until you
can disprove (yes, reversal of the burden of proof) that you actually
did swap coins. But you’re not reaching the original goal: no one
knocking your door. (Unless you happen to swap coins with a
lower-targeted person.) This creates a strange misguided motivation for
people with high privacy needs to use coin swap and ones who only want
privacy for the sake of privacy to stay away from it. In summary:
chances are more likely the color of your coins gets worse.


#6

You should note that in the wiki :wink:


#7

Could you please do that? You have such a very much more eloquent way to word things. :slight_smile:

On top of that… Rather than sending coins through a bitcoin mixer or using coinjoin…

Pure theory, but I think this is how privacy could be increased. Make sure this is legal for you, since there are too many jurisdictions and I am not a lawyer.

Low privacy / easy:

  • Deposit coins on an exchange that does not require personal data.
    • Perhaps a decentralized exchange.
  • Withdraw and check if you are getting “other coins” using a block explorer. (I.e. your transaction in looks different from your transaction out.)

Higher privacy / more time consuming:

  • Deposit coins on an exchange that does not require personal data.
    • Perhaps a decentralized exchange.
  • Buy a privacy focused coin such as monero.
    • I am no expert on which coin implements effective privacy vs snake oil - this is something very difficult since one has to understand the cryptography behind these coins.
      • Since no one can answer this question with certainty it is a good idea to move through several privacy coins that are based on different code bases, technologies and developers.
  • Withdraw.
  • Now, using the non-public transaction ledger coin such as monero make a transaction
    • from your own account to another account of your own.
    • Not sure if necessary. Might be required. Not sure if a deposit using a transaction ID (required by some exchanges) also reveals the account number (address) it was sent from. To prevent that, transfer from your own account to another account of your own.
  • Perhaps buy some other privacy focused coin using (another?) decentralized exchange.
  • Withdraw again.
  • Another internal transaction.
  • Trade back to target currency (such as bitcoin).
  • Withdraw.
  • Done.

#8

Done.


#9

it’s place taked modern DASH/XMR/ZCASH for safety without mixers and exchanger borrowers, and LTC for service and goods payment with equal to BTC acceptance, security and zero commission… and solution is easy now - not think about what to do, as there few years before and no alternatives - just exchange to any of DASH/XMR/ZCASH anywhere))

in same disadvantage to DASH/XMR/ZCASH - is that in our days BTC are locked by legal services such as Coinbase etc, being tied to fraud TXs - which you don’t even know about and lose your money paying for all those guys))) people are not so stupid themself, they just trusted those Coinbase etc ads shouting from all the corners - safe / anon / profit / don’t wait just register and give your credit card))) and get a result))) and they will be no less, they will be next and old)))

S**hort: It is questionable whether Bitcoin is “anonymous” (cash is still king).** - cash is not a king and never was - is only evidence to court, no matter are you got it from cops in change of bitcoin at LBC or drop pulling em from ATM, or anything else - cash is dirtiest while all this tracking just paperwork))) as spell analitycs / fingerprints / camera record too - movie materials only if have a written scenario))) and if it is like that for today’s life level, seems to be and tomorrow))) hand holding and signature is king - take in mouth with glovers and swallow if fired - all the thing)))

tracking / spell analitycs / fingerprints / camera record - paperwork, they no valid at court (evidence is logs) - guys who cashing powder money, just tell it is not my notebook (which contain cashing cards with incoming dirt money right from sellers) - and get free after few month, even here in russia - cuz he not held taken money from ATM or cash at all… and all silk road stories…

certain mess about anonimity was Telegram messenger, being popular in UAE and darknet - well advertised, proprietary fork of Jabber OTR))) but when u receive SMS it use to login - cops 100% knowing who you are, cause of mobile carreer track - they don’t need even to truncate you, it all in logs of their PC))) and phone numbers are disclosed by login till present time…


#10

Sorry, but this is total BS. As an example, the vast majority of the world’s illicit substance transactions use cold hard cash - from one set of hands to another - and “darknet” total transactions would be a pissy % of total volume.

That’s not to say unexplained wealth i.e. suitcases of cash under the bed isn’t difficult to explain when dealers are busted, but nobody (smart) is suddenly waking up and saying “I know, I’ll start doing all my pot/LSD/coke etc transactions in cryptocurrencies! It’s perfectly anonymous!”

Why do you think the powers that be want to ban cash? Because it is still relatively anonymous for most transactions.

The smart kingpins just launder all their cash via legitimate assets (businesses, real estate etc), so there are no piles of greenbacks for authorities to immediately seize, or to cast serious suspicion upon the individual concerned. And when the “big daddies” go down, there is always a network of businesses involved, and a team of lawyers & accountants that disguised the dirty cash to make it look clean.

Note I neither endorse this behavior or other illegal activities, but raise it for discussion purposes only.


#11

the answer here is drop - if drop show a finger in your direction at court - then you sit, as they do, and cash he give you will become evidence… and all it was long time ago - then was another not refundable e-money now replaced by crypto, such as PayPal, Webmoney and lot more - so if u use a drop or just any exchange being anon there - no one can show a finger in your direction and lock you… just as in case above:)

present time is not enough to dump dirt money just in one legal business (why not use just eBay via anon),

you need a whole chain, you may discover wwh-club.net (.bit in Blockchain DNS) or darkmoney.cc (ru ip or https://y3pggjcimtcglaon.onion) for current answers - but if you legit any fraud via just one legal business u just get caught, today or in a year or 10 it will be knock knock neo…

and, in case of crypto - only their mistake is to use legal companies wallets as you self give em your real ID etc or login using same real phone - tied yourself, and it an only prove you give em by your own hands…other remain their fantasies until u caught with drugs in ur hands or /giving/ cash for it…

and yes - kingpins you write about - they not use cash for launder - they use same e-money as bank accs registered on drop, companies bank accs registered on drop etc… (just as e-money accs you same register on drop who don’t know it using proxy)…


#12

OK, this is getting off-topic, but I want to illustrate the point.

“Darknet” drug busts are common, and large sites go down regularly for various reasons: technical ineptitude, insiders, hacking, open source information, mass surveillance tools targeted at runners, digging through seized data, following crypto-currency breadcrumbs, reliance on postal systems etc.

I mean, they’re already on Silkroad v3 or v4 at last count, after the others went down hard.

https://www.deepdotweb.com/tag/bust/

https://motherboard.vice.com/en_us/article/vv73pj/7-ways-the-cops-will-bust-you-on-the-dark-web

Meanwhile, cartels that have existed for decades flourish with cash central to all “Narcoecomics” business operations (although sometimes they pay in other drugs or weapons) e.g.

http://www.nytimes.com/2012/06/17/magazine/how-a-mexican-drug-cartel-makes-its-billions.html

The drug trade is a cash business you can’t buy kilos with your credit card. So while politicians tend to focus on cartels primarily as importers of drugs, the narcos also devote an enormous amount of energy to the export of money. Cash is collected in small denominations from individual buyers and then bundled in great stacks of broken-in bills that are used to pay wholesalers, like the Flores brothers. These bills are counted, hidden in the same vehicle compartments that were used to smuggle drugs in the opposite direction and then sent to stash houses in Los Angeles, San Diego and Phoenix. From there, they move across the border into Mexico.

What happens to the money when it gets there? The cartel employs professional money launderers who specialize in drug proceeds, and according to Robert Mazur, a former D.E.A. agent who infiltrated the Colombian cartels, the fee for fully scrubbing and banking illicit proceeds may run Sinaloa more than 15 cents on the dollar. But a great deal of the cartel’s money remains in cash. In the early 1990s, a Sinaloa accountant sent planeloads of U.S. currency to Mexico City in suitcases holding $1 million each. When Miguel Angel Martínez worked for Chapo, the kingpin would test his loyalty, adding an extra $200,000 to one of the suitcases to see if Martínez would pocket it. “Eight suitcases, compadre, so that is $8 million,” he would say. (Martínez never fell for the trick.) A sizable share of the cash is devoted to paying bribes, and some is sent to Colombia to purchase more product, because drugs offer a strong return on investment. “Where would you put your money?” the former Cisen officer Alejandro Hope asked me with a chuckle. “T-bills? Real estate? I would put a large portion of my portfolio in cocaine.”

Even so, the business generates such volumes of currency that there is only so much you can launder or reinvest, which means that money can start to pile up around the house. The most that Martínez ever saw at one time was $30 million, which just sat there, having accumulated in his living room. In 2007, Mexican authorities raided the home of Zhenli Ye Gon, a Chinese-Mexican businessman who is believed to have supplied meth-precursor chemicals to the cartel, and discovered $206 million, the largest cash seizure in history.

https://www.quora.com/How-do-Drug-Cartels-operate

One of the reasons there is so much violence is because of the need to utilize cash in their business.

[…]

Wachovia laundered over $356 Billion Dollars for the Sinaloa Federation alone over a few years before the government made a sweetheart, back room deal to let Wells Fargo absorb that corporate “person” without having to jail a single banker or executive.

etc.

Anything electronic leaves a trail, nearly all software is flawed, and the results in the real world prove the point. Cartels don’t do Bitcoin et al. :grinning:

Personally I don’t care what the black marketeers do, since I make a lawful living and couldn’t care less how these characters go down in flames, but that said, on the balance of the evidence, the successful large-scale crims do primarily cash, and it has worked wonders for them for decades and given them enough power to destablize and corrupt entire nations and turn them into warzones e.g. modern day Mexico.

That’s also the reason all the black ops run by the likes of the CIA use cash (although they are also fond of drugs for cash/weapons or vice-versa).


#13

they usually, most always - taken with real evidence - such as logs of mail (just as you fraud by phone lol), whole bunches of drugs, papers wrotten by drops or buyers etc, most of this “we found his notebook and lol there is whole Silk server” - is magazine work:)

and, in case of long stories above - most of it talk about nothin, they use protection of corrupted authorities… and after all as there in joke - why not anyone can catch a joe? no one need him. so as there lot of other crimes than these people - they taken only when real get annoyed someone…

launder all their cash via legitimate assets (businesses, real estate etc)

legalisation part is not for security - as written above, for security there is drop/anon (aka shadow) part))) it is for declaring part - for using in current country, as if you receive funds and not declare it it wil be immediate seized -

as any fraud money will be seized too, no matter what part of chain from. if u a building company for example, your acc get arrest making you think who you taking from etc… you can’t just receive money on any account - credit card, or anything else - if you not declare em properly it seizes, under anti-launder law…

successful large-scale crims do primarily cash

only dealers take cash cuz they nothing to do - then it in order goes into e-money - bank accs of companies / credit cards etc… so e-money is launder for cash - cuz if cash received by dealer will be found at kingpin he will be arrested same time… what about later chains, yes, cash is used - but it trackable all time - and final point to them anyway to became e-money, before receiving /clear/ (as these BTC lol) cash if needed from own bank acc, mb in foreign country)))

suitcases of cash under the bed isn’t difficult to explain when dealers are busted, but nobody (smart) is suddenly waking up and saying “I know, I’ll start doing all my pot/LSD/coke etc transactions in cryptocurrencies! It’s perfectly anonymous!”

so as you can see they started to use it long before you - while you deal with drops via XMPP they deal mouth to mouth and secure line, sattelite SSL etc - and of course, real business it rough as real cc / goods / bank fraud for example, and usual use rough schemes)))

and, about cash - when they comes at home to cashier, cash is seized too. any cash w/o declare seized lol even if u have it more then your CC limit gives to take w/o worries - same exact useful.

and these folks from Silk / Snowden / E-BTC / Paxful - just mixed their e-biz with real biz. it’s a deadly sin - don’t know why they make it - but it almost clear at all why))

and answering, in current time crypto not able to process such a big volume as above $100k without pain, so bank accs and drops still rules - same if you buy ready bank/corp acc, ur seller make it by hands same as their))) and lower amounts are preferred to process via PayPal / WU long ago…

sure they not go to bro in Chase as written on books, telling - hell yeah clear my money, they just make another drop acc and hire an accountant sitting in office nor hammer)))


#14

Demonizing and attacking digital currency was never about stopping unlawful activities but limiting individual autonomy. Same with gun rights.