Crypto Privacy Tools Offer Essential Protections, New Report Argues
Cryptocurrency privacy tools provide “essential protective functions” that restore a degree of financial privacy previously taken for granted in traditional finance, according to a new report from non-custodial crypto platform ChangeNOW and digital asset management platform CoinRabbit.
The report, which draws on data from sources including TRM Labs, Chainalysis, the RAND Corporation, and the authors’ own internal research, highlights the risks associated with data exposure on conventional public blockchains. These risks encompass financial access for individuals under economic sanctions and authoritarian regimes, corporate sovereignty for companies transitioning to blockchain infrastructure, and individual security against scams and “wrench attacks.”
The report contends that sanctions disproportionately affect those least able to influence the actions being punished. It cites the example of Iran being cut off from SWIFT, which prevented ordinary citizens from receiving foreign payments, purchasing imported goods, and collecting family remittances, while the political elite maintained alternative channels. U.S. Treasury Secretary Scott Bessent has stated that Operation Economic Fury seized approximately $1 billion in Iranian crypto, including a $344 million USDT freeze on the Tron network.
Corporate treasuries face a different kind of exposure. The report notes that any entity with access to a company’s wallet address can reconstruct its vendor relationships, payment frequencies, estimated payroll, and supply chain dependencies – data that would remain confidential in a traditional banking environment. Research from Statista cited in the paper indicates that 36% of board members are concerned about internal data becoming public, with the average data breach costing $4.44 million.
High-net-worth crypto holders are also personally vulnerable due to the transparency of conventional blockchain infrastructure, particularly in the context of “wrench attacks.” Walter Barrett, Chief Strategy & Growth Officer at CoinRabbit, commented, “Public blockchain transparency allows anyone to audit your net worth in real time, turning private wealth into public information.”
This transparency carries significant risks. CertiK reported 52 verified wrench attacks in the first half of 2026, resulting in the exposure of $124.1 million – nearly 12 times the figure from the first half of 2025. France accounted for 33 of these incidents, following breaches at France Travail and ANTS that enabled attackers to link home addresses to suspected crypto holdings. French prosecutors have since charged 88 individuals, including more than 10 minors.
Furthermore, blockchain transparency aids scammers in identifying high-value targets. Internal CoinRabbit research found that approximately half of surveyed high-net-worth holders had experienced a targeted social engineering attempt within three years, and that 30% utilize data-broker removal services to sever the link between their identity and on-chain activity.
The report emphasizes that crypto privacy is a double-edged sword. The authors reference TRM Labs data indicating total illicit crypto inflows of $158 billion for 2025, a 145% increase, with Chinese-language escrow and laundering networks accounting for over $100 billion. “Pig-butchering” fraud caused $75 billion in losses between 2020 and 2024, and 84% of verified fraud and scam inflows now occur via stablecoin rails.
Despite these challenges, the authors argue that the primary vulnerability for enforcement “lies at the fiat off-ramps” where crypto is converted into spendable currency, “not within the upstream transactional privacy infrastructure.”
Albert Quehenberger, founder of AQ Forensics, stated that privacy does not impede investigators. He explained that while it “may increase the complexity of an investigation,” it “rarely determines whether a criminal can ultimately be identified.” Attribution, he noted, is achieved through on-chain analysis, KYC records, exchange cooperation, and stablecoin issuer intervention, rather than “relying on blockchain transparency alone.”
The report’s authors highlighted their own platforms as examples of best-practice privacy-preserving crypto architecture, citing ChangeNOW’s private transfer routing and CoinRabbit’s custodial model.
“The privacy debate starts from the wrong assumption that ordinary users must prove they have nothing to hide by exposing everything,” said Pauline Shangett, Chief Strategy Officer at ChangeNOW. She advocated for the crypto industry to “build systems where access is justified, targeted, and lawful, not universal by default.”
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