Zcash (ZEC) Isnt So Private? Arkham Reveals Ability to Track Transactions

In reality, the shielded pool is never reached by the majority of Zcash activity. For regulatory and compliance reasons, transparent addresses are strongly preferred by exchanges, custodians, and institutional players. This makes entry and exit points visible throughout the network, which is exactly the data that blockchain intelligence companies take advantage of.

According to Arkham, shielded addresses are still opaque and only show up as SHIELDED, but the surrounding flows frequently reveal enough metadata to track user behavior in any case.

The report even focuses on U.S. governance. Zcash allegedly found in one tracked wallet was taken from Alexandre Cazes, 26 year-old Canadian whos believed to be the person behind dark web marketplace AlphaWeb, following his 2017 arrest. Additionally, Arkham identified a specific trader who allegedly transferred money to Gemini weeks later, turning a $4.49 million ZEC purchase into a $6.6 million profit.

This does not imply that Zcash privacy is compromised. Pure shielded transactions continue to be cryptographically concealed. However, Arkhams analysis reminds us of a simple rule: privacy is more dependent on how users actually use the protocol than it is on the protocol itself.