Bitcoin is often touted as a fungible and private asset and digital cash alternative, when in fact it is technically non-fungible. Each bitcoin in circulation has a distinct history attached to it ensuring that 1BTC != 1BTC. While coin histories can be somewhat ofuscated with tools like CoinJoin, the fungibility of Bitcoin remains distinctly lacking.

Many Bitcoiners purport that fungibility can be gained through more users mixing, or by peer-pressuring and boycotting exchanges and services that flag or trace Bitcoin transactions. In theory this is possible (suppose in another universe, everyone mixes), but why leave it up to chance?

The Monero community sees fungibility as a basic safety feature. Good tools should include safety features by default, strong enough to withstand both governmental and social attacks. This is far preferable to relying on the goodwill of governments and regulators, or the peer-pressure of us as users to ensure fungibility of digital cash. Do you really want your coins to be fungible only if your grandma correctly follows a 50 page mixing guide?

Monero relies on privacy by-default, for all users and all transactions, to ensure that 1XMR = 1XMR, no matter what. Monero is fungible today, not just in a pipe dream.

This concern isn’t only a fun thought exercise, unfortunately, as users of Bitcoin privacy tools are being harassed today.

Below is a list of sources confirming cases of flagging, denied withdrawals, denied deposits, and censorship by services because of a distinct lack of fungibility within Bitcoin. The list is broken down by the tool or reason for the flagging or censorship.

Current confirmed cases: 27

Wasabi

• A user’s Binance SGD account is frozen upon attempted withdrawal to Wasabi Wallet for mixing:
  • Twitter Source
    

    Bitcoiners be warned: this is what happens if @BinanceSGD finds you withdrawing to @wasabiwallet

    Not surprised that my transactions are tracked, it’s KYC after all

    But I’m very concerned that Binance knew I was sending to wasabi, when all I input was a bc1 address, nothing more pic.twitter.com/T6ePjahESY

    — Catxolotl (@bittlecat) December 19, 2019

• A user’s Paxful account is frozen upon attempted withdrawal to Wasabi Wallet for mixing:
  • Reddit Source
• A user’s Bitfinex account is frozen upon attempted withdrawal to Wasabi Wallet for mixing:
  • Reddit Source
• A user’s Bitstamp account is flagged months/years after withdrawal to Wasabi Wallet for mixing:
  • Twitter Source (deleted after this blog was published)
    
    Source Image

    
    

• A user’s BitVavo account is closed upon attempted withdrawal to Wasabi Wallet for mixing:
  • Reddit Source
• A user’s Paxos account is frozen upon attempted withdrawal to Samourai Wallet for mixing:
  • Twitter Source
    

    Wtf?? Apparently you are not allowed to do what you want with your bitcoin once you own the keys. Fortunately that’s not how Bitcoin works, but the level of chain analysis here is alarming. What is a correct response? @MartyBent @matt_odell @vandrewattycpa pic.twitter.com/BhMDThLHGc

    — McHodled (@McHodled) January 28, 2020

Samourai

• A users’s Bottlepay deposit is rejected/returned upon depositing mixed funds:
  • Twitter Source (deleted after this blog was published)
    
    Source Image

    
    

JoinMarket

• A user’s BitMEX account is flagged months after withdrawal to JoinMarket for mixing:
  • Twitter Source
    

    Got an e-mail from @BitMEX about old #Bitcoin deposit transaction (last summer) that “may be connected with activity that is against 1.1(a) of the HDR Terms of Service.”, it was @joinmarket coinjoin. #privacy

    — Lord Kristaps Kaupe  ($ is for sats) (@kristapsk) March 23, 2021

All CoinJoins

• Multiple user’s deposits are flagged by BlockFi upon depositing from a CoinJoin tool like Wasabi:
  • Twitter Source
    

    Have received multiple reports that @TheRealBlockFi is flagging deposits with coinjoin history. Majority of flags have been for utxos that interacted with Wasabi’s fixed fee address which has since been removed.

    Either way expect this to continue. Not your keys, not your coins.

    — ODELL (@ODELL) March 2, 2020

  • Response from BlockFi
• A user’s loan is closed while under water (causing a loss of 50%) due to the previous owner of the coins using a mixing service or tool:
  • Twitter Source
    

    Another happy BlockFi customer. pic.twitter.com/ljwodJR4r0

    — Bitfinex’ed 🔥 (@Bitfinexed) February 5, 2022

  • Reddit Source
• A user’s account is flagged upon mixing coins after withdrawal from Voyager:
  • Twitter Source
    

    Didn’t close the account, but received a warning from @investvoyager for mixing coins _after_ withdrawing from their exchange.

    Add them to the list of enemies to privacy.

    They claim it’s against their T&C, but it’s not. Not illegal either. Thus, enemies of privacy.

    — Domingo (@sundaywar) March 2, 2021

• Paxos official statement on handling of Bitcoin with a history of CoinJoin:
  • Twitter Source
    

    — Justin Ehrenhofer 🎂🏳️‍🌈 (@JEhrenhofer) March 6, 2020

• A user’s account is frozen due to 6mo-old post-CoinJoin transactions by Bitwala:
  • Twitter Source
    

    #CoinJoin flagging@bitwala sent me an email 3 days ago about a couple of post-CoinJoin transactions that happened almost 6 MONTHS AGO.

    “We await your response with the requested information within the next 5 days in order to be able to continue our banking journey together.”

    — Riccardo Masutti ⚡️ (@RiccardoMasutti) March 26, 2021

Tainted Bitcoin

• A user receives tainted Bitcoin that cause two exchange accounts to be locked upon deposits:
  • Bisq Source
• A user is attacked by the media upon receiving a donation from a “far-right” donor:
  • Twitter Source
    

    Ano