Still, better Signal than Facebook, I guess. :-/
P.S.: if I'm missing something and the check was done in privacy-conscious way, I would love to be corrected.
"Signal periodically sends truncated cryptographically hashed phone numbers for contact discovery. Names are never transmitted, and the information is not stored on the servers. The server responds with the contacts that are Signal users and then immediately discards this information. Your phone now knows which of your contacts is a Signal user and notifies you if your contact just started using Signal. "
https://support.signal.org/hc/en-us/articles/360007061452-Do...
There is indeed a way to truncate enough to balance the amount of data sent to the device vs privacy.
I missed that option (basically now the Google Safe Browsing API works) and the Signal page isn't clear that this is how it works.
"Signal periodically sends truncated cryptographically hashed phone numbers for contact discovery. Names are never transmitted, and the information is not stored on the servers. The server responds with the contacts that are Signal users and then immediately discards this information. Your phone now knows which of your contacts is a Signal user and notifies you if your contact just started using Signal. "
I think, you should read up a bit on how Signal manages contacts/address books.
Afaik, Signal servers have no information who your contacts are.