1

John Doe creates two separate bitcoin accounts on a ledger nano s and funds the accounts from two separate sources. The first funding source is a known terrorist organization and the second funding source is Coinbase or some other KYC compliant exchange.

Can the bitcoin on the first account funded by the terrorist organization be linked to the bitcoin on the second account belonging to John Doe if both accounts live on the same Ledger Nano S? Assume that there are no transactions between the two accounts.

2 Answers 2

1

There are no accounts in Bitcoin. Its based on UTXO.

According to support.ledger.com:

When you add an account, Ledger Live gets its unique extended public key from your Ledger device. Thanks to the xpub, Ledger Live then generates individual public addresses and checks their balances in the blockchain to calculate your account balance.

So accounts in Ledger Nano S are HD wallets with a master public key and lots of addresses.

If there are no transactions there will be nothing on blockchain to link them. Ledger servers have the information about your XPUB, addresses etc. so you should use your Bitcoin full node for better privacy

In some cases there can be other ways to link two transactions, addresses etc.

  1. Some information shared online by user.
  2. Coinbase in this example has all the information about user and one of the wallet. If user is not using his full node and explorer, IP address can be used to link.
  3. Forced address reuse: https://en.bitcoin.it/wiki/Privacy. Sending small amounts of bitcoin to same address and wait for user to spend them hoping to get more information about wallet.
  4. Anything else common in those two transactions: time, amount, type, version, locktime, fees, change etc. Most of them should be different in this example.
  5. Future transactions from these two wallets.
1
  • Assuming only one bitcoin account now. If Bitcoin is sent from Coinbase to ledger bitcoin account, then bitcoin is sent from bad actor bitcoin address to the same ledger bitcoin account, the bitcoin will live on separate addresses and will not necessarily be linkable to each other even though the bitcoin appear to be consolidated in the same account in ledger live. It’s only when another transaction for a sufficient amount of money that requires combining bitcoin from Coinbase funded address and bad actor funded address that the two become linked. Is that right?
    – anonymous
    Commented Sep 9, 2021 at 15:07
0
  1. A single future transaction between the two accounts would trigger a reaction from any Onchain surveillance system that is being used.
  2. If the IP address or device fingerprint that was used to send a TX at the major exchange was ever used on another account at the same exchange or was affiliated with a TX of another known terrorist financing address. Onchain surveillance just scans all public lists even if they aren’t all trust worthy, depends how reliable of data the researcher is willing to use.

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service and acknowledge you have read our privacy policy.

Not the answer you're looking for? Browse other questions tagged or ask your own question.