The Ethereum Foundation (EF) researcher disclosed that the IP addresses of Ether $2,120 stakers are watched as part of a larger information collection, prompting the cryptocurrency community to flag Ethereum for privacy issues. EF researcher Justin Drake provided this knowledge “internally” — likely at EF — in an April 12 interview on the crypto podcast Bankless.
Drake added that the metadata he was referring to is used to track a variety of things: “There’s a lot of metadata, you can look at deposit addresses, withdrawal addresses, fee recipients, and IP addresses.” Drake’s remarks appeared to catch Bankless presenter Ryan Sean Adams off guard. “So, it’s a fairly Sybil-resistant dataset of your most involved Ethereum citizens?” Adams inquired. “Exactly,” Drake said.
The discussion began when Drake predicted that “special airdrops” would be available for solo stakers but not industry heavyweights: “Then you can identify, okay, we know who Kraken is, we know who Coinbase is, and we can just not give them an airdrop if the purpose of the airdrop is to airdrop to specific individuals who are running solo validators.”
The discussion sparked a firestorm on Crypto Twitter. One Twitter user referred to Ether as the “real surveillance coin,” while another cynically rephrased Drake: “We can stop censorship by censoring those we don’t like.”
Another called the scenario “central governance to a T.” One Twitter user advised that Ethereum users take on-chain privacy responsibilities into their own hands by running a Linux operating system, utilizing a Virtual Private Network (VPN), and keeping crypto-assets on a hardware wallet such as Ledger:
It’s not the first time a privacy-related comment has generated a stir in the crypto world.
In November, ConsenSys, the firm behind the Ethereum wallet Metamask, began collecting IP addresses. The policy change was implemented to guarantee that the company could meet Know Your Customer (KYC) and Anti-Money Laundering (AML) requirements as needed.