Blockchain intelligence firm Arkham has sparked debate by revealing it can identify parties behind over half of Zcash transactions. The company claims to have tagged more than 53% of all ZEC activity, attributing roughly $420 billion in volume to known entities. This research surfaced in December 2025, prompting renewed scrutiny of Zcash’s privacy model.
Arkham’s analysis covers 48% of transaction inputs and outputs and ties about $2.5 billion, or 37% of total ZEC balances, to named individuals and institutions. Importantly, the firm did not break Zcash’s cryptographic protections. Instead, it used entity clustering, exchange records, government seizure data, and analysis of transparent addresses to link on-chain activity to real-world actors.
Zcash founder Zooko Wilcox responded by clarifying that shielded-to-shielded transactions remain fully private. He stated that Arkham did not actually deanonymize any ZEC held in the shielded pool because such tracking is impossible—the necessary information simply does not exist. The key distinction lies between transparent addresses (T-addresses), which are publicly visible, and shielded addresses (Z-addresses), which use zero-knowledge proofs to hide sender, recipient, and amount.
As of late 2025, less than a quarter of all ZEC in circulation was stored in the shielded pool. The majority of activity occurs on transparent addresses, particularly on centralized exchanges that nearly always use T-addresses. This means that until shielded pool usage grows significantly, behavioral analysis of transparent transactions remains feasible for most network activity.
The controversy resurfaced in May 2026 as ZEC rallied sharply, driven by quantum computing concerns and the upcoming NU7 network upgrade. The newer Orchard shielded pool provides stronger privacy guarantees than the older Sapling pool, but it still holds a minority of ZEC activity. Until shielded usage expands, Arkham-style tracking will remain possible for the majority of transactions.