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- A researcher has raised concerns about Ethereum staking labeling Ether as the “real surveillance coin.”
- Users who stake their Ethereum can be tracked by their IPs and the researcher is aware of such existing databases.
Ethereum staking has been the talk of the crypto town for the last few days. As reported by CNF, around $34 billion worth of staked Ether has been unlocked with validators able to withdraw their assets for the first time since December 2020. Amidst these developments, one researcher has raised concerns for those staking. Justin Drake, who works as the “Researcher” at the Ethereum Foundation has revealed that users who stake their ETH can be tracked by their IP addresses.
The researcher went on further to reveal that the collection of IP addresses was part of a broader metadata collection, that includes deposit addresses, withdrawal addresses, and fee recipients. To validate his claim, Drake says that he has internal information that such databases do exist.
Ethereum = 1984 chain
Justin Drake, who works as the “Researcher” at the Ethereum Foundation, said today that when you stake your ETH, you can be tracked via IP address.
He says he knows information “internally” that such databases exist. pic.twitter.com/2V6DvTobL3
— Pledditor (@Pledditor) April 13, 2023
Answering podcast host Ryan Sean Adams who’d asked “So it’s a fairly Sybil resistant dataset of your most involved Ethereum citizens?” to which the researcher answered exactly.
There’s a lot of metadata, you can look at deposit addresses, you can look at withdrawal addresses, you can look at fee recipients, you can look at IP addresses.
Late last year, there were similar concerns when ConsenSys, the team behind the Ethereum wallet Metamask, announced that it is collecting user IPs and Ethereum Wallet Addresses in order to comply with know your customer and anti-money laundering.
The crypto community has been astonished by the statements, condemning it and labeling the asset a surveillance coin. Some have shared ways to keep their finances private with one user suggesting using a Virtual Private Network (VPN) and storing crypto assets on hardware wallets.
DeFi security setup:
– Linux system
– VPN 24/7
– Ledger (hardware wallet)Protect yourselves from data mining and scams 🔐
Am I missing anything? https://t.co/X2YrGwpbdx
— DeFi Crypto Vaults 👻 (@DefiVaults) April 13, 2023
The revelations are untimely as the U.S. SEC has just begun cracking down on Ethereum staking. But to be clear, the SEC has stated that it is only cracking down on staking offered by staking service providers such as cryptocurrency exchanges. Individual staking and decentralized staking services are out of their purview. In its view, this constitutes offering unregistered securities. This led to Kraken discontinuing its staking program and paying a $30 million fine to the SEC earlier this year.
Despite the gloomy revelation, ETH prices have remained steady fast with the asset gaining around 12 percent in the last 7 days. This has been born out of renewed optimism after the Shanghai upgrade about a week ago. At the time of press, Ethereum is enjoying support above $2,000 and is exchanging for $2,100. This despite more than 1 million ETH worth over $2.1 billion have been withdrawn from Ethereum.
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At its core, cryptocurrencies are built to offer financial freedom and allow users to remain anonymous. Ethereum as most in the Twitter community have highlighted is failing at privacy.
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