Many people have heard about the recent $390M Bitget hack and the theft of crypto from Ledger. In both cases, the hackers laundered money through Zcash (ZEC)—and in both cases, their funds were traced.
How?
Case #1: The $390M Bitget exchange hack.
The flow looked like this:
ZEC: known address holding stolen funds → eight transfers totaling 246.74 ZEC → Zcash shielded pool → withdrawn in batches to NEAR Intents deposit t-addresses → exchanged through Zodl/Zashi → 4.77 BTC sent to ten Bitcoin addresses. Some of the BTC was later consolidated at addresses already known to belong to the attacker.
YFarmX was able to trace the stolen Zcash out of the privacy pool—the same highly private Orchard pool!
Case #2: The Ledger theft.
The hackers’ flow was:
The hacker split ETH among new wallets, sent it to Tornado Cash, then, after withdrawing it, swapped it for ZEC and moved it into Zcash’s shielded pool. The funds then came out of the pool and were swapped back into USDC or ETH.
Here, too, YFarmX was able to trace crypto that passed through Zcash’s private Orchard pool. Read more on X at the link above.
How did YFarmX trace ZEC through the highly private pool in both cases? Through Zcash’s main vulnerability: t-addresses—highly transparent, labeled t-addresses. That’s the main problem with ZEC: all deposits into and withdrawals from the Orchard pool go through public, labeled addresses, where the amount, time, and so on are visible.
In other words, YFarmX knows that, say, 545 ZEC went into the private pool, and then just waits for the same—or roughly the same—amount to come out. In the second case, they even added together separate withdrawals to get to roughly 545. For example, they know the hacker might split the amount into 3–5 parts, so they look for withdrawals not just by tracking one withdrawal of 545 ZEC, but by adding up multiple withdrawals to reach approximately 545.
In the first case, involving Bitget, researchers knew the hackers’ distinctive transaction fingerprint: they were making the transactions through the Zodl/Zashi wallet. That let them narrow down the search for withdrawals from the private pool even further.
Overall, this is what’s bad about Zcash: it has this public, open, long-labeled pool. Inside the Orchard pool, you’re invisible, but you can’t enter or leave it invisibly, because all swap services, exchanges, and payment systems—all of them—use only t-addresses. That’s what tripped up the hackers in both cases: their deposits into the Orchard pool were visible—the date, time, and amount—and their withdrawals from the pool were visible too: the date, time, and amount.
That’s the key difference between XMR and ZEC. XMR has no public transactions: all deposits and withdrawals, all transactions, are anonymous and private. Even if you deposit XMR to an exchange, that blockchain transaction is indistinguishable from a transaction between your own wallets. And with XMR, you can’t simply add up deposit and withdrawal amounts, because the amounts are hidden, as are the senders and recipients in every transaction.
And, as YFarmX themselves admitted, XMR is harder to trace than Zcash.
How?
Case #1: The $390M Bitget exchange hack.
The flow looked like this:
ZEC: known address holding stolen funds → eight transfers totaling 246.74 ZEC → Zcash shielded pool → withdrawn in batches to NEAR Intents deposit t-addresses → exchanged through Zodl/Zashi → 4.77 BTC sent to ten Bitcoin addresses. Some of the BTC was later consolidated at addresses already known to belong to the attacker.
YFarmX was able to trace the stolen Zcash out of the privacy pool—the same highly private Orchard pool!
— YFarmX
Case #2: The Ledger theft.
The hackers’ flow was:
The hacker split ETH among new wallets, sent it to Tornado Cash, then, after withdrawing it, swapped it for ZEC and moved it into Zcash’s shielded pool. The funds then came out of the pool and were swapped back into USDC or ETH.
Here, too, YFarmX was able to trace crypto that passed through Zcash’s private Orchard pool. Read more on X at the link above.
How did YFarmX trace ZEC through the highly private pool in both cases? Through Zcash’s main vulnerability: t-addresses—highly transparent, labeled t-addresses. That’s the main problem with ZEC: all deposits into and withdrawals from the Orchard pool go through public, labeled addresses, where the amount, time, and so on are visible.
In other words, YFarmX knows that, say, 545 ZEC went into the private pool, and then just waits for the same—or roughly the same—amount to come out. In the second case, they even added together separate withdrawals to get to roughly 545. For example, they know the hacker might split the amount into 3–5 parts, so they look for withdrawals not just by tracking one withdrawal of 545 ZEC, but by adding up multiple withdrawals to reach approximately 545.
In the first case, involving Bitget, researchers knew the hackers’ distinctive transaction fingerprint: they were making the transactions through the Zodl/Zashi wallet. That let them narrow down the search for withdrawals from the private pool even further.
Overall, this is what’s bad about Zcash: it has this public, open, long-labeled pool. Inside the Orchard pool, you’re invisible, but you can’t enter or leave it invisibly, because all swap services, exchanges, and payment systems—all of them—use only t-addresses. That’s what tripped up the hackers in both cases: their deposits into the Orchard pool were visible—the date, time, and amount—and their withdrawals from the pool were visible too: the date, time, and amount.
That’s the key difference between XMR and ZEC. XMR has no public transactions: all deposits and withdrawals, all transactions, are anonymous and private. Even if you deposit XMR to an exchange, that blockchain transaction is indistinguishable from a transaction between your own wallets. And with XMR, you can’t simply add up deposit and withdrawal amounts, because the amounts are hidden, as are the senders and recipients in every transaction.
And, as YFarmX themselves admitted, XMR is harder to trace than Zcash.