How private is a privacy coin? Arkham’s latest analysis pulls back the curtain on Zcash.
$420 Billion in Supposedly Private Transactions Are Actually Transparent
Arkham published a detailed breakdown of Zcash transaction tracking in 2026, amid renewed interest in privacy-focused cryptocurrencies. The report states that while Zcash uses zk-SNARKs to hide transaction details, most onchain activity remains exposed through transparent addresses. According to Arkham, over $420 billion in Zcash transaction volume has already been linked to known entities and institutions.
Zcash’s Dual System: Transparent vs. Shielded
Zcash launched in October 2016 via the Electric Coin Company, led by cryptographer Zooko Wilcox-O’Hearn. It borrowed Bitcoin’s Proof-of-Work model, supply cap, and UTXO structure, adding zero-knowledge proofs for optional privacy. Arkham notes that Zcash operates with two address formats: transparent addresses (similar to Bitcoin, publicly revealing activity) and shielded addresses (concealing senders, receivers, and amounts via zk-SNARKs). The network supports four transaction types with varying privacy levels: transparent-to-transparent is fully visible; shielded-to-shielded hides almost everything except fees.
Compliance Needs Override Privacy Promises
However, Arkham finds that most Zcash activity still uses transparent addresses. Exchanges and institutional platforms favor visible transfers to meet regulatory compliance. As a result, blockchain analytics platforms can easily trace Zcash’s transaction history. Arkham claims it has labeled more than half of all Zcash activity, attributing over $420 billion in volume to identifiable users and organizations. This means the privacy coin’s original design intent has been largely diluted by actual usage patterns.
Shielded Pools Are Not Safe Havens
Arkham explains that shielded transactions become truly untraceable once assets move completely inside private pools. However, analysts can still monitor funds entering and leaving those pools via transparent addresses. In other words, shielded pools only protect internal transfers; any interaction with transparent addresses eventually exposes the trail.
Real Cases: US Government Wallet and a Lucrative Trade
The report also highlights tracked wallets tied to major cases. One belongs to the US government, which seized Zcash from AlphaBay founder Alexandre Cazes in 2017. Another case: a trader bought $4.49 million worth of Zcash during an October market crash, later transferred funds to Gemini, reportedly generating a $6.6 million profit. These examples show that even with a privacy coin, if entry and exit points are exposed, onchain sleuths can still lock onto targets.
There is a glaring gap between Zcash’s privacy promises and its technical reality. Arkham’s investigation reminds the market: no absolute anonymity exists, only a game between regulation and technology.