Yes, but not by negotiating with every fool who attempts it, for there are far too many fools in the world.  I've personally talked two startups out of similar business models in the past.

We can stop this by making sure that its not viable, by tweaking our practices and the ecosystem to be an environment that things like this just can't work in. This means: Anonymous mining, Discouraging address reuse, coinjoin, etc.  Importantly, people need to step up and fund the development of privacy tools.  Today there is no business model for decenteralized privacy tools that people can use casually and thus pervasively.

We must vote with our wallets— not our spending, but how we choose to transact and what developments we fund. As a spending group the people who really realize the importance of privacy and fungiblity will always be a small enough minority that short-sighted business people will find it all too easy to go without their business.