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Ethereum Researcher Says Staking Reveals IP Address Triggers Privacy Issues

Ethereum Foundation (EF) researchers revealed that the IP addresses of $2,120 Ether shareholders were being monitored as part of a larger information gathering, prompting the cryptocurrency community to flag Ethereum for privacy concerns. EF researcher Justin Drake provided this knowledge “internally” — likely at EF — in an interview April 12 on the crypto podcast Bankless.

Drake adds that the metadata he’s referring to is used to track things: “There’s a lot of metadata, you can look at deposit addresses, withdrawal addresses, chargeees and IP addresses.” Drake’s statement seems to have caught Ryan’s Bankless presenter Sean Adams off guard. “So this is a reasonably Sybil-resistant dataset of your most engaged Ethereum citizen?” Adams asked. “Exactly,” said Drake.

The discussion started when Drake predicted that “special airdrops” would be available to solo stock makers but not industry heavyweights: “Then you can identify, okay, we know who Kraken is, we know who Coinbase is, and we can’t give them an airdrop if the goal of the airdrop is is to airdrop to certain individuals running a single validator.”

The discussion sparked a storm on Crypto Twitter. One Twitter user called Ether “the real surveillance coin,” while another sarcastically repeated Drake: “We can stop censorship by censoring what we don’t like.”

Others call the “central government to a T” scenario. One Twitter user suggested that Ethereum users take the on-chain privacy responsibility into their own hands by running the Linux operating system, leveraging a Virtual Private Network (VPN), and storing crypto assets in hardware wallets such as Ledger:

This is not the first time privacy-related comments have caused quite a stir in the crypto world.

In November, ConsenSys, the company behind Ethereum wallet Metamask, began collecting IP addresses. This policy change was made to ensure that the company can meet Know Your Customer (KYC) and Anti-Money Laundering (AML) requirements as needed.

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