Although using a SOCKS5 proxy server can ensure anonymity in most cases, it's a fallacy to believe that you're completely secure from any kind of detection. The US court cases which have have been in the news lately were initiated by IRAA after they were able to obtain the IP addresses of Kazaa users using online detection methods. If this were my only concern, I'd feel quite comfortable running Kazaa behind a SOCKS5 server.
However, in some other countries (example, Singapore) the ISP's themselves are actively monitoring the online activities of their internet users and issuing warning letters to copyright violators. Given such a scenario, even if you hid yourself behind a hundred SOCKS servers they can still see right thru your ass!!
The reason is simple, SOCKS5 traffic maybe authenticated but it's NOT encrypted. Just use any packet sniffer to test what I'm saying.
I think some of the posters here who don't understand the complete picture are doing a disservice to the rest of the community by spreading misinformation about the supposed fool-proof security of SOCKS5. It's very kind of you to point out the advantages of using SOCKS proxies, but it's much more important to emphasize the weaknesses behind it because some clueless soul, who otherwise might have ceased to share files online, could still be running P2P software on their PC under the false assumption that he/she would never get caught.
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