CipherTrace develops a Monero tracking tool to aid investigations by US authorities.

Privacy and anonymity are the main benefits of cryptocurrencies, but due to the transparent nature of Blockchain technology, cryptocurrency transactions are not as anonymous as some think. Rather, Bitcoin (BTC) and other cryptocurrencies are pseudo-anonymous, as each transaction on a Blockchain network is transparent, allowing wallet addresses to be traced back to their origin.

For example, cryptocurrency intelligence company CipherTrace is capable of tracking several hundred cryptocurrency transactions by analyzing wallet addresses, exchange information, and smart contracts. John Jefferies, the chief financial analyst at CipherTrace, told Cointelegraph that the company is currently capable of tracking more than 800 cryptocurrencies to support crime investigations. This is extremely relevant, as recent discoveries show that cryptocurrency-related crimes during the first half of this year have already accounted for $ 1.4 billion in theft, hacking, and fraud.

Can Monero now be tracked?

While Bitcoin has been ranked as the number one crypto option among criminals, A large number of transactions in dark markets are carried out using the privacy currency Monero (XMR). Because of this, law enforcement has been very interested in finding a way to track down Monero. Although until now there was no tool capable of tracking Monero transactions, Dave Jevans, the CEO of CipherTrace, mentioned that the company has developed the first tool to track Monero transactions.

According to Jevans, the tool, which has been in development for more than a year, It will be used by the United States Department of Homeland Security to track Monero transactions. He noted that the recent contract CipherTrace with the Department of Homeland Security Science and Technology Directorate resulted in the development of forensic tools for law enforcement agencies and government agencies to track Monero transaction flows for criminal investigations:

“The tools include transaction visualization, exploration and search tools for Monero transaction streams that have been integrated into the financial investigations product of CipherTrace inspectors.”

A game changer to combat those who use Monero for crimes

Specifically, CipherTrace’s Jefferies explained that the tools allow tracking of stolen Monero or those used for illegal transactions. While the product is not suitable for anti-money laundering purposes yet, Jefferies mentioned that Monero ransomware cases can be traced back to their sources. This is notable as it has been mentioned that the criminals behind the ransomware are switching from Bitcoin to Monero to better protect their identities.

According to Jefferies, the tool will allow law enforcement to narrow down ransomware cases to a couple of different cryptocurrency addresses. Although Jefferies was unable to reveal the exact number of tracked transactions, it shared that the tool has been validated on a large number of Monero transactions:

“The tool displays transaction flows. Like all CipherTrace products, it protects user privacy by not tracking individual user identities.” That is what law enforcement agencies do, based on our analysis and legitimate court orders. “

Jefferies further noted that the instruments help secure crypto exchanges, OTC trading desks, and mutual funds that they are not accepting Monero from illicit sources. This could very well be a game changer for Monero, which has recently been delisted by various exchanges due to poor compliance regulations and a general lack of transparency compared to other cryptocurrencies.

The crypto community speaks

Although the new CipherTrace tool will help combat Monero-related crime, members of the crypto community remain skeptical. Justin Ehrenhofer, an organizer of the Monero community task force and a regulatory compliance analyst at DV Chain, a cryptocurrency trading organization, told Cointelegraph that, Although you are not surprised by CipherTrace’s tool for tracking Monero, you have yet to receive any specific information on what the team has accomplished.:

“We assume that CipherTrace has developed a novel method to track Monero transactions, but I’m not quite sure what they can do, so it is difficult to interpret the legitimacy of their claims. To say that they have a method to view Monero transactions. it does not mean that it is now as transparent as Bitcoin transactions. “

Ehrenhofer further commented that it is extremely unlikely that CipherTrace can track Monero to the extent that they can track other cryptocurrencies. “Without specific information, any speculation is just that, speculation“He added. In addition, he noted that the investigation will continue to advance the privacy features of Monero, regardless of the actions taken by CipherTrace or other companies that try the same techniques.

Although there are several privacy coins out there, XMR remains the largest and one of the most unique due to its advanced security features. Ehrenhofer explained that the main technology behind Monero is RingCT, which is a system that combines Circle Signature and Confidential Transaction cryptography. “This means that I can look at a Blockchain network on my computer and make it appear that I am spending other people’s funds without their actual participation.“he said. Ultimately, Monero makes it possible to hide all parties to a transaction, including sender, receiver, and amount details.

With this in mind, Ehrenhofer mentioned that Monero has been specifically designed to withstand scrutiny from governments and others trying to police it. Therefore, continue to rely on the use of Monero: “As we have no reason to believe that there are new ways of trying to track Monero transactions, or any indication of their effectiveness, Monero users can continue to transact with confidence.However, Jefferies disagrees, noting that the tools CipherTrace has developed for American authorities have laid the foundation for future, more advanced investigative tools, which will be leveraged by law enforcement officials for Monero transactions. .

Skepticism aside, Some cryptocurrency enthusiasts believe that financial surveillance tools, such as those being developed by CipherTrace, violate human privacy rights. Alex Gladstein, the director of strategy for the Human Rights Foundation, a nonprofit organization, argument recently on the podcast The Blockchain Debate that Blockchain analytics firms are downright bad for Bitcoin and other cryptocurrencies.

Gladstein, who was joined on the show by Jevans, He explained that providing government officials with information on cryptocurrency transactions allows governments to spy on individuals’ financial transaction data. He claimed that “financial watch” companies, such as CipherTrace, they may even decide to work with dictatorships, allowing these governments to have more control over citizens:

“I realize we have the Bank Secrecy Act, but transactions under $ 10,000 must remain private. This is not supposed to be given to the government, but if Jevan’s company has its way, this goes away , and even small microtransactions become a simple game for the US government or even worse, for dictatorships. “

While this is an extreme example, there are some practical benefits to consider. Ryan Taylor, the CEO of Dash – another privacy-oriented cryptocurrency – told Cointelegraph that there is a big difference between authorities tracking Monero transactions and personal transactions:

“Not wanting your spouse to find out that you bought jewelry for your anniversary is very different from preventing the government from tracking down your illegal drug empire. Most people are just looking for ‘enough’ privacy, and I don’t think the ability to professional tracking affects most people significantly. “

Keep reading:

We wish to give thanks to the author of this article for this remarkable web content

CipherTrace develops a Monero tracking tool to aid investigations by US authorities.

Dispensary Business News