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They can only trace transactions from wallet to wallet but you can open a wallet with no identification (so essentially, you can only be tracked if you send it to a verified exchange). Yes monero is completely blacked out, they can't trace anything but unfortunately they have had security issues with it's protocol in the dark market, and most of the dark market still uses good old bitcoi lol. Same with other coins that use ZK-snarks.

This is all over my head but I read some stuff saying that it could all be tracked - maybe even Monero - but it didn't mention the more obvious drawback of cryptos - that they can all be price manipulated - so that may just have been a bit of fear mongering