Using Muun to withdraw from a CEX cheaply and without KYC links
723 sats \ 25 comments \ @SpaceHodler 5 Mar 2023 bitcoin
I'm considering the following protocol:
  1. Buy BTC on a CEX that supports LN (Kraken specifically)
  2. Withdraw via Lightning from the CEX to Muun
  3. Withdraw on-chain from Muun to a hardware wallet
The point is to withdraw BTC, bought on a CEX with fiat, without doxxing my hardware wallet address, and keep the fees to a minimum.
Does the above make sense or am I missing something?
If I understand correctly, this wouldn't reveal my Muun on-chain address, since the withdrawals from the CEX would be via LN. But what about the fees?
(2) is free on Kraken, but I understand under the hood it's costly (Muun charges high routing fees to cover the cost of the submarine swaps) and Kraken would be paying for it, so they may not be happy if I do it often and for small amounts. Does (3) incur any fees other than a single on-chain transaction? Does Muun charge a percentage for on-chain withdrawals like custodial wallets typically do (WoS, Coinos etc.)?
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26 sats \ 2 replies \ @DarthCoin 5 Mar 2023
The point is to withdraw BTC, bought on a CEX with fiat, without doxxing my hardware wallet address,
Facts:
  • on Muun the xpub is controlled 100% by Muun servers. That means they know all your movements. You CANNOT control Muun xpub.
  • Muun is NOT a LN wallet. It just fake it using submarine swaps, with expensive fees and bloating the network.
You have many other options to achieve your goal. Read:
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0 sats \ 1 reply \ @SpaceHodler OP 5 Mar 2023
Thanks for the thorough response, that's a lot of reading material.
I realize Muun is not an LN wallet and only pretends to be one, and that using it for LN payments leads to blockchain bloat. However, in this case I wouldn't be using it for LN payments, but rather as a way to withdraw funds from the CEX into cold storage while hiding the final address.
Most people just withdraw from the CEX to cold storage directly, which creates an on-chain tx anyway and it has to. My routine wouldn't be bloating the chain considerably more: instead of a direct withdrawal I'd have a submarine swap into Muun (which is still one tx) and let's say every 10 LN withdrawals from the CEX to Muun I'd submarine swap from Muun to cold storage.
Another option would be to LN-withdraw into Coinos instead of Muun and swap to BTC for a 0.1% fee. But:
  1. I'd rather avoid the percentage fee and just pay one BTC tx fee
  2. Coinos is custodial (I know you consider Muun custodial, but I still feel my funds are safer in Muun than Coinos).
I made a mistake in my OP: withdrawals into Muun would be expensive for Kraken to subsidize regardless of their value, because it's a ppm (%) thing rather than a fixed fee.
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110 sats \ 0 replies \ @DarthCoin 5 Mar 2023
Pay attention to the guides. Yes, indeed there's a lot to read.
Yes Coinos is custodial but could be really anonymous, non-KYC. Instead Muun is tracking you because you CANNOT install Muun WITHOUT Google services. That means they already know WHO you are, where you are. Just keep in mind that.
But you will never learn new stuff and how to better use bitcoin if you do not read. All my guides are made after I tested all solutions, during all these 10+ years in Bitcoinlandia. Are not there to bullshit you.
Read, analyze, choose the best solution for you. If you still want to use Muun, so be it, but is better that you would know all the aspects.
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1 sat \ 3 replies \ @TheBTCManual 5 Mar 2023
If the goal is just to hide your final wallet address, you could just do a coinjoin when either submarine swap out of muun or any submarine swap for that matter.
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0 sats \ 2 replies \ @SpaceHodler OP 5 Mar 2023
But is the coinjoin even necessary? When withdrawing via LN from Kraken to Muun, Kraken doesn't see my Muun on-chain address, and Muun is no-KYC. So can't I just submarine swap out of Muun directly to my final wallet address without any extra steps?
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0 sats \ 0 replies \ @benthecarman 5 Mar 2023
They likely can link it to your address on chain, you'll have to reveal the payment preimage on chain and kraken could see that and know what transaction you used to receive on chain
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0 sats \ 0 replies \ @TheBTCManual 5 Mar 2023
Muun is still creating an on-chain transaction for you, with their node so they have your final wallet address along with whatever swap provider so if you're fine with them having your final address
When in doubt, or not using your own node and channels, CoinJoin!
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1 sat \ 0 replies \ @WeAreAllSatoshi 5 Mar 2023
I don’t have expertise to answer your questions, but I like that you’re asking them! Check Darth’s links for more info
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0 sats \ 0 replies \ @sandbeach123 5 Mar 2023
I only use muun for swaps (offchain to onchain), on very specific cases (for certain range of sats). I never store anything in that app. For most amounts I use boltz or whatever alternative (fixed float, etc). For withdrawing I use 2 ways: 1 Simple one, just withdraw from the exchange onchain. They will probably charge high fees but will be fast (high priority). 2 More complex, withdraw lightning btc to one of my channels. Fast, cheap and private (I guess). In order to be able to do this I have been opening many channels since the last year and have been leaving most of them almost empty on my side, so I have a fair amount of inbound liquidity. Then When I want to send funds to my HW onchain, I swap them in. Try to never close channels because IMHO live channels are kind of an asset itself for the future.
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0 sats \ 1 reply \ @joyepzion 5 Mar 2023
This is a good workaround but is Kraken KYC free?
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0 sats \ 0 replies \ @SpaceHodler OP 5 Mar 2023
It's not KYC free, hence the need for a workaround.
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0 sats \ 1 reply \ @Zepasta 5 Mar 2023
The moment i saw this title, i knew @DarthCoin would come.
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11 sats \ 0 replies \ @DarthCoin 5 Mar 2023
I will post this meme until more people will realize the mistake they are doing by using Muun.
This is not a joke. I will always call out bad apps, scams, shitcoins. As I said many times before: I do not have anything against the Muun devs guys. They are good bitcoiners, only that they choose the wrong design of this app.
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10 sats \ 11 replies \ @022fbc9cef 5 Mar 2023
Is there any CEX that allows Lightning withdrawals? I am not aware of any.
Do it differently:
  1. Buy USDT or your other favorite dollar-pegged token with lots of liquidity on a CEX.
  2. Send the USDT to your wallet.
  3. Send the USDT to another wallet that is linked to a DEX (ShapeShift, Incognito) or go to SideShift.ai directly.
  4. Buy Bitcoin on the DEX.
You can e.g. use a Avax bridge to bridge out btc.b to BTC (use the stablecoin on the Avalanche network and then bridge out using the Core Wallet).
As a final step, withdraw your beautiful Bitcoin to your HW wallet (Trezor, Ledger).
Then, the CEX should not have a record of your BTC address.
(Or find a local community that trades Bitcoin peer to peer and avoid CEX altogether. Like the "Vexl" app on the App Store).
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10 sats \ 3 replies \ @SpaceHodler OP 5 Mar 2023
Kraken allows LN withdrawals.
I'm not a fan of alternative chains, and while it could work, it would probably be even more expensive than simpler options like Fixedfloat.
I'm aware of no-KYC options like hodlhodl, bisq and RoboSats, but I want to get BTC at the best price possible and currently it's CEXes that have the most liquidity.
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0 sats \ 2 replies \ @022fbc9cef 5 Mar 2023
I didn't know that Kraken allows LN withdrawals, good to know. Not that popular CEX here in Europe. So why not just withdraw to your wallet and then swap out using Boltz, SideShift, or FixedFloat, as you say?
Yes, the option I outlined will definitely be more expensive, but if you want to do larger amounts, that is the only option I know of. I am happy to learn though if there are better ones.
CoinJoin etc., is fine too, but the issue is that the CEX will know you own Bitcoin, how much, and at what price you bought it (which is a lot of information, even if they do not know your exact holding address).
If we are right and Bitcoin is indeed very valuable, the small spread on the price right now will seem silly in the future. So I am not buying based on price, but based on which is the most private option.
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0 sats \ 1 reply \ @SpaceHodler OP 5 Mar 2023
o why not just withdraw to your wallet and then swap out using Boltz, SideShift, or FixedFloat, as you say?
Withdrawing to Muun is exactly withdrawing to one of my wallets, with the benefit that, unlike Boltz etc., swapping out of Muun doesn't incur a percentage fee.
You make a good point about the CEX knowing I bought Bitcoin and at what price, but erasing the KYC trace means they don't know what happened to it afterwards; in particular, they can't know if I still own it. If I withdraw from Kraken via LN, they won't even know I withdrew to the same wallet every time. For all the know maybe it wasn't even a withdrawal into my wallet, but a payment for goods or services, right after I bought the BTC, and the price I spent it at was roughly the same as the price I bought it at (and therefore no capital gains to pay tax on). While in reality my coins sit secretly in my cold storage and do a 10x over the next halving cycle.
If you want a no-KYC option cheaper than RoboSats etc., Relai.ch charges 1-2.5% and doesn't require KYC up to a certain amount.
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0 sats \ 0 replies \ @022fbc9cef 5 Mar 2023
Good points. I am not an expert on Lightning but the CEX (Kraken) knows you withdrew to Muun, right? (It can see the path and where the Lightning ended – someone correct me if I am wrong).
Hence the CEX knows you withdrew to Muun, and then Muun knows your cold storage address (since they have a record of your incoming LN, swap, and outgoing tx).
If the data from the CEX and Muun both leak or are provided to 3rd parties, you might still be connected to your coins. But I understand that is highly unlikely, if at all possible.
I like to do at least one more hop in LN in order to obfuscate the movements of funds a bit more (e.g., withdrawing LN to my own node and then sending it to Breez to use Boltz for swapping – good thing is Breez has Boltz integrated). But this might be too much.
If your solution with Muun works, I guess it is fine. You are not keeping your coins on Muun so you do not need to worry how they do things, you only care that they work for a few minutes for you to make your transactions.
If Muun is using submarine swaps to imitate LN, it is their problem and the economics of transaction fees will either allow them to do it (and there is not problem then) or it will force them to change this practice.
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25 sats \ 0 replies \ @cointastical 5 Mar 2023
Is there any CEX that allows Lightning withdrawals?
Exchanges with support for Lightning Network https://cointastical.github.io/Exchanges-With-LN
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0 sats \ 5 replies \ @DarthCoin 5 Mar 2023
LOL please don't promote the use of shitcoins!
Is there any CEX that allows Lightning withdrawals?
Definitely you are a shitcoiner if you do not know that.
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0 sats \ 4 replies \ @022fbc9cef 5 Mar 2023
Do you use any fiat in your life at all?
If yes, you are a fool and a hypocrite to criticize the use of shitcoins in this scenario.
If no, I applaud you and I wonder how you pay for your morning coffee, your barber, and everything else?
You know, things have their utility, but why should I explain color to a blind person...
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0 sats \ 3 replies \ @DarthCoin 5 Mar 2023
Did you read my guides and my posts here on SN? I live only using BTC from 2018... FUCK FIAT FUCK THE BANKS FUCK THE GOVS FUCK THE SHITCOINERS
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0 sats \ 2 replies \ @022fbc9cef 5 Mar 2023
I didn't read your stuff. I read your comments here and I am kind of like "this dude is a dick, so I'm not really looking more into what he has to say."
Anyway, even if you live only on BTC (well done), then you for sure need to pay for some things in FIAT when the recipient doesn't accept BTC, so you are using FIAT in some way, even if you do not hold it.
The scenario I described uses shitcoins, but I am not saying anyone should hold/keep any of these coins (you may need like a $1 in Avax to pay for the fees, and that is it). In my scenario, you end with only BTC, so there is nothing wrong with using the things at our disposal for that.
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0 sats \ 1 reply \ @DarthCoin 5 Mar 2023
Is so fucking simple: don't do shitcoining! If you are doing it, you are my enemy.
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10 sats \ 0 replies \ @022fbc9cef 5 Mar 2023
Whatever, dude.
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